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. | ||||
HOW TO CALCULATE HRA EXEMPTION : | ||||
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. |