House Rent Allowance (HRA) Exemption rules with detailed analysis

House Rent Allowance (HRA)
House Rent Allowance (HRA), is an amount which is paid by employers to employees
as a part of their salaries. This is basically done as it helps provide employees
with tax benefits towards the payment for accommodations every year.
It is determined on the basis of your Salary & City of residence.
It is regulated by the provisions of Section 10(13)A.
Only Salaried employees can claim the benefits of HRA and only if the
Salaried person is living in rented Accommodation.
In case you stay with your parents, you are eligible to pay rent to your parents and claim HRA.
But, in this case, you must have sufficient documents (Rent Receipt & transaction) as proof.
Note : This rule doesn’t allow you to pay rent to your spouse and claim HRA exemption.
If your annual rent exceeds Rs. 1,00,000 – Landlord’s PAN card is mandatory to submit with employer.
In case, Landlord doesn’t have a Pan card, he/she can provide a self-declaration
(stating his Name, Property Address and Amount of Rent).
Rent receipt is required if rent exceeds Rs. 3,000.
If you couldn’t submit documents (Rent receipts/declaration) to your employer, then also, you can claim the benefit of HRA while filing your ITR. And you need to keep it safe to produce when asked by IT deptt.
Least of the Following is exempt :
1 Actual HRA Received
2 50% of Salary (If Residing in Metro City- Mumbai, Kolkata, Delhi, Chennai) OR 40% of Salary (If Residing in Non-Metro City)
3 Actual Rent Paid Less 10% of Basic Salary
For the Purpose of Calculation of HRA :
Salary means :
Basic Salary + DA (forming part of salary) + Commission Income (if based on, fixed %age of Turnover achieved)
Note : For claimimg HRA, you should receive HRA as a Salary Component.
If you don’t receive HRA or you are a self-employed individual, you can claim Deduction U/S-80GG upto Rs. 60,000 per year.


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