Use allowance like LTA, HRA, car maintenance to reduce your tax liability

There are many of them, but only a few can be used to offset the tax burden

Most salary structures have an allowance element, be it leave travel allowance (LTA) or others. 

But all of them do not get tax benefits. As Archit Gupta, founder, and chief executive officer of Cleartax.in, says, “Allowances are monetary benefits given in addition to the basic salary. Some of the allowances are specifically granted to meet specific expenditures.” 

These allowances are part of the salary package, and included in the overall CTC, or cost to the company. According to the Income Tax Act, since some of these are added to the salary, they are taxed under the head “Income from Salaries”. Allowance is