House Rent Allowance, commonly known as HRA, is an allowance provided by employers to employees to cover their rental expenses. It is a significant component of the salary structure for many Indian employees. In this guide, we’ll delve into the eligibility criteria, calculation methods, required documentation, and additional provisions under Section 80GG for non-salaried employees.
- Eligibility Criteria for Claiming HRA:
To be eligible for claiming HRA, employees must meet certain criteria:
- You must be salaried individuals.
- You must incur rental expenses for their accommodation.
- You must provide proof of your rental expenses.
If you are not getting HRA from your employer or you are not a salaried individual, you can still get the tax benefit from the Rent paid u/s 80GG
- Calculation of HRA Exemption:
Amount of HRA exemption allowed u/s 10(13A) is not same as Rent paid amount. For Eg: If you are paying Rs. 8,000 rent per month, you will not be allowed a deduction of Rs. 96,000 while filing your ITR. HRA exemption is calculated in the following manner and least of these is allowed as exemption:
-
- Actual HRA received from the employer.
- Actual rent paid by the employee less 10% of Basic Salary + DA
- 50% of salary for employees residing in metro cities (40% for non-metro cities).
- Rent receipts are enough for Claiming HRA?
To claim HRA exemption, employees need to submit the following documents to the employer
- Rent receipts showing the amount paid and the landlord’s details.
- Rental agreement between the employee and the landlord.
- Any other supporting documents as required by the employer or the Income Tax Department.
Though employer may provide the HRA exemption on the basis of Rent Receipts submitted, Income Tax department may not consider such documents as sufficient for providing the exemption. It is recommended to keep documents such as Rental Deed, Payment proofs and any other documents in addition to the Rent receipts to enable the IT Department to assess the genuineness of the employee’s need for rented premises.
Can I claim HRA if I live with my parents?
Can I claim HRA if I own a house in a different city?
Can I claim HRA if I own a house in a same city?
Can HRA be claimed if rent is paid to a family member?
Can you claim both the HRA tax benefit and Home Loan tax deductions if you are staying in a house bought on loan and you work in the same city?
Disclaimer: The materials provided herein are solely for information purposes. No attorney-client relationship is created when you access or use the site or the materials. The information presented on this site does not constitute legal or professional advice and should not be relied upon for such purposes or used as a substitute for legal advice from an attorney licensed in your state.
One Response
Hi, Thanks. This clarifies alot.