ZOho Company

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 Income Tax is a direct tax that is levied on any individual’s or entity’s income during a financial year. It is directly paid to the government, like all the other direct taxes. Provisions in the Income Tax Act 1961 also provide for various Exemptions and Deductions under specified sections. Deductions can be claimed against Investments, Allowances, etc., which can reduce the taxable amount of an individual.

Income Tax Exemptions of Allowances:

1. Exemption on House Rent Allowance (HRA)

Expenses incurred by employees on staying in rented accommodations can be claimed for deduction under the old tax regime. However, the whole amount of HRA can not be claimed for deduction. The amount for which deduction can be claimed is the least of the following:

  1. Total HRA paid/received by an employee
  2. Actual rent paid less 10% of basic salary
  3. 50% of the salary for metro cities and 40% of the salary for non-metro cities

Any amount exceeding the limit will be taxable at the prescribed rate.

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