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August 22, 2008

CLA or HRA???

Filed under: personal — neosurya @ 04:26

CLA is Company Leased Accommodation; a perk where the company signs the lease on your behalf, pays for the rent, security deposit, and maintenance. Of this, the rent is deducted from your salary and you have to pay tax on either 20% of your annual income or your rent, whichever is lesser. HRA is House Rent Allowance, where you can claim tax exemption for a part of your rent. I do a few back-of-the-envelope computations and determine that it is financially better to opt for HRA than for CLA. I end up paying double the tax in CLA than in HRA. However, paying the security deposit and dealing with maintenance is not a headache that I want to take when I am new in the country.

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