Is there really a case for HRA benefit under the old regime?

livemint.com:

After the budget tweaked rates under the new tax regime, it has become a straightforward choice for taxpayers. However, some salaried individuals who pay a huge amount as rent wonder if they can maximise tax-savings in the old regime.

The argument is that their flexi-pay benefits and work-related allowances such as leave travel allowance (LTA), car leases, fuel reimbursements, phone bills, meal cards, and gadget allowances all add up to a substantial deductible chunk. 

However, experts said it’s not worth the hassle.

“The benefit of reduced tax slab rates in the further incentivised new regime far outweighs the practical hassles of blocking funds and maintaining documentary evidence for claiming a combination of deductions in the old regime just to match the breakeven points," said Mayank Mohanka, founder of TaxAaram India and a partner at S.M. Mohanka & Associates.

Also, most work-related benefits such as reimbursements and car leases are available under the new regime too, so the net impact should be seen by calculating the benefits under both regimes.

HRA can save enough tax under the old regime under certain conditions. Foremost, the HRA should be a big chunk of the cost to company (CTC).

The HRA exemption that can be claimed is typically lower than the actual amount given in the CTC due to the manner in which it is calculated. Of the total rent paid, the exemption is available only for the least of the following three parameters: a) actual HRA received, b) 50% of basic salary, c) rent paid in excess of 10% of gross salary.

Unless the rent paid is substantially higher than the HRA granted, tax exemption on the full HRA cannot be claimed. So, don’t misread the HRA stated in the CTC as the absolute amount on which tax