Tax Deduction

  For some people, the tax-planning season has just started. You know that house rent allowance (HRA) and the deduction related to home loan repayment can lower your tax liability.  You will be pleased to know, in certain cases, you can avail tax benefits from both of these.   Here’s how:   HRA and home loan HRA exemption can be claimed under section 10(13A) of the Income-tax Act, 1961. To calculate this exempted amount, lowest of these three is considered: 1) Actual HRA received from the employer, 2) 50% of salary if employee lives in a metro city; and 40% if the employee lives in a city other than a metro, and 3) actual rent paid minus 10% of salary (basic plus dearness allowance plus turnover-based commission). Home loan tax benefits are calculated in a different manner. In case of a home loan, the deduction on principal repayment can be claimed under section 80C of the income-tax Act, up to the threshold limit Rs1.5 lakh, or the actual princ...