Income tax savings: Your wife can save income tax of Rs 1,80,000! You get this benefit for years

Income tax savings: There are many ways to save income tax in India, one of which is to save tax by paying rent to the wife. This method can be beneficial for those taxpayers who want to make a part of their salary tax free under House Rent Allowance (HRA). Let’s know how this method works and how much tax can be saved.

Rent Agreement: First of all, you need to have a valid rent agreement with your wife. It should clearly state the rent amount and other terms.

Proof of payment: The amount payable as rent should be paid via bank transfer or cheque. This will ensure that you have proof of payment.

HRA Claim: You can claim the amount paid to you as HRA from your employer. While calculating HRA, three major factors are taken into consideration: – The actual HRA that you receive. – 50% (if you live in a metro city) or 40% (if you live in a non-metro city) of the rent paid. – The amount remaining after deducting 10% of the rent paid and the basic salary.

How much tax will be saved?

Suppose your monthly salary is ₹1,00,000, which includes ₹20,000 HRA, and you pay monthly rent of ₹25,000 to your wife. – In this case… Annual HRA: ₹2,40,000 Annual rent payment: ₹3,00,000 10% of basic salary: ₹1,20,000

Calculation of tax exemption

Thus, the HRA exemption will be calculated as follows: Annual HRA: ₹2,40,000 Rent – 10% of basic: ₹3,00,000 – ₹1,20,000 = ₹1,80,000 50% of basic (in metro cities): 50% of ₹1,00,000 = ₹6,00,000 Out of the above three, the minimum amount is ₹1,80,000, which you can claim tax-free as HRA.

These things need to be kept in mind

Genuine agreement: The rent agreement should be genuine and there should be no fraud behind it.

These things have to be kept in mind

Proof of payment: Proof of payment in the form of bank statement or cheque payment is a must.

These things have to be kept in mind

Rental income: Your wife will have to show rental income in her income tax return.

What is the advice for you?

Paying rent to your wife can be a great way to save tax, but it needs to be done carefully and correctly. It is important to consult a chartered accountant before taking advantage of this method.

The post Income tax savings: Your wife can save income tax of Rs 1,80,000! You get this benefit for years first appeared on informalnewz.

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