Save Income Tax : House Rent Allowance
If a portion of your salary is marked as House Rent Allowance or HRA and you are paying rent, then submit rent receipts. The house should not be in your kids, spouses or your own name. As this is the biggest saving from the tax burden, it helps if you exchange houses with relatives/friends whose house is in the name of a non-earning member.
The total amount of rent paid or the amount earmarked as House Rent Allowance in your payslip, whichever is less, will be deducted from your gross income from salary. However, it should not be more than 50 percent of salary for those living in metro cities or 40 percent of salary for others. If you are paying more than Rs.5000 per month as house rent, you will have to submit a lease document and your rent receipts should have a revenue stamp.
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