How to choose between 'month-on-month' and 'annual' for HRA declarations

House rent may vary from month to month. So, choosing month-on-month for HRA declarations allows employees to adjust the HRA exemption according to what they actually pay towards house rent every month. Further, it results in accurate declarations, reduced compliance burden, and improved tax planning.

Choosing annual for HRA declarations is also a good option as it requires less paperwork, reduces errors, and is more convenient. Furthermore, annual declaration allows employees to submit all eligible receipts at once which can maximize their tax savings.

Steps to Update HRA Tax Exemption Settings:

1. Go to the Payroll section.

2. Click on Settings.

3. The Pay Groups window will open.

4. Choose the relevant pay group if you have multiple pay groups.

5. Click on the Configure icon next to the selected pay group.

   

6. On the next page, click on Other Settings.

7. Then, select Miscellaneous Settings.

8. Find the three dots and click on Update Settings.

   

9. In the Miscellaneous Settings overlay window, scroll to find the HRA Declarations section.

10. Under the question "How do you want the HRA to be considered for tax exemption?", choose one of the following options:

• Month-on-month

• Annual 

11. Once selected, click Save.