What is the significant of declaring HRA?
Every employer who is paying salary to his employee which exceeds the maximum amount chargeable to tax have to deduct the tax from the salary of employee and deposit that tax to the govt (income tax dept.) Now in order to compute the amount of tax, employer has to find the taxable salary and not the salary which the employee is receiving from him. Taxable salary = Salary paid to employee minus certain deduction. HRA/MEDICAL/LTA are some of the deductions amongst other which are eligible to deducted. So in order to reduce their taxable salary and finally tax to be deducted, person declare their HRA/MEDICAL etc