Its time when you would be asked to submit proof of investment to your employer to save taxes. HRA (House Rent Allowance) has been one thing which confuses many people. so here answers to 8 frequently asked questions about HRA:
Read on…
Any salaried employee can claim HRA if they satisfy the following condition:
Also Read: How to Claim HRA Tax Exemptions while filing Income Tax Return?
The maximum HRA that can be claimed for tax exemption is minimum of
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The HRA calculation has been explained by an example:
Assumptions
HRA Exemption Calculation:
Download: ebook on Tax Planning for FY 2018-19
Rs 9,000 being the least of the three amounts will be the exemption from HRA. The balance HRA of Rs 6,000 (15,000-Rs 9,000) is taxable.
If the rent paid is less than Rs. 3,000 per month you need not submit any proof. But if the rent is more than Rs 3,000 you need to submit rent receipt / rent agreement to your employer. A one rupee revenue stamp affixed with the signature of landlord receiving the rent, with other details of the rented address, rent paid and name of the person who rents it, need to be mentioned on the receipt.
In case the annual rent exceeds Rs 1 lakh you also need to submit PAN Card copy of the landlord. In case landlord does not have PAN Card, you would need to submit a declaration from landlord stating the same. Download the declaration for landlord from here. Employers do not accept declaration anymore!
It is wise to still keep rent receipt and rent agreement because, at the time of assessment, the Income Tax Officer may demand the receipts/ agreement.
Yes, if your parents own the house you can pay them rent. This would make your parents landlord. But .they will have to declare it in their personal income tax return to prevent litigation in the future.
In case your parents don’t pay any tax or are in lower tax slab its good idea to pay them rent. This can be good strategy to save tax outgo from family.
Also Read: Best Tax Saving Investments
You cannot claim rent paid to spouse. The relationship between a husband and wife is not commercial in nature; a husband and wife are supposed to stay together. So payment of rent to a spouse will not be accepted by the income tax authorities.
If you have taken home loan for buying a house in a different city from where you are working, you are eligible to claim both HRA exemption and Home Loan Tax benefits.
Also Read: How to Generate Rent Receipts Online?
It could be that the home is at a considerable distance from your work place. Or, it could be that the home is rather small and your parents are living in it so you have to stay elsewhere on rent. You still can claim both, HRA Tax exemption and Home Loan Tax exemption – provided you are paying your rent. However, it is necessary you have some of your belongings at your home (the one you own) and you stay there on and off on during weekends and holidays.
Also Read: Submit Income Tax Proof to Employer – How, When and Why?
Despite this, if your employer does not agree and denies your tax benefits, you will have to claim it at the time of filing your tax returns.
The period in which the HRA is actually received from the employer, must necessarily pertain to the period in which the employee actually pays rent for his accommodation. In case HRA is received for a period in which no rental accommodation is occupied by the employee, exemption cannot be claimed.
If you have some other question about HRA, ask us!
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View Comments
i have 2 houses and one is given to my in laws and i take a very small amount as rent and other one is vacant i pay 120015 as interest on loan for the current FY
which is better for me from tax point of view claim interest straight away or claim loss on propert
As you have two houses - you will have to show rent received on atleast one house. The net loss/gain on property would be total rent received*70% - Interest paid
Can I take rebate on interest paid on home loan during Project under construction as Project will be completed next year
No as per income tx rules you can tax benefit only after completion of house.
Hi I have a question,
My parents own a house in the city and we already have tenants there. Can I claim HRA for that house though I'm not living in it. ?
:) you know the answer - No you cannot claim tax benefit on HRA if you are not paying rent.
Hi Sir,
I have joint House loan, Land name of my father and we took Joint loan in name of my father, brother and me. How much % can I claim tax benefit. My father and brother not claiming any tax benefit . My father is pension holder.
Please help on this.
You can only claim tax benefit on home loan if the house is owned or co-owned by you. As far as % is concerned you can claim in proportion you pay.
Hi amit,
I have 2 flats in pune. so can I show both flats interest and principle amount for Income tax deduction ?
also can I show both flat property tax receipts for income tax deductions.
Also, from next month my company is moving far away from my flats so may be I have to shift in rented flat. so can I show
HRA along with both flats principle and interest amounts.
Yes you can easily claim tax benefit on both your flats and HRA if paying rent. In case of more than 1 house, you can show only one as self-occupied and other has to be either rented or "deemed to be rented".
Hi Amit,
Thank you for your elaborate explanation on the tax matters.
I am salaried govt employee. I have two home loans and both the houses are on my name. i am living in one of the house and the other one is on rent and rent comes in my spouse account.
1- Can i claim interest of both the home loans (1L for first house + 3.5 L for second house)
2- My NPS contribution is 1L & 1 L is from my employer.
Can i claim 50 K in 80CCD1 , 50K in 80CCD(1B) & employers 1 L in 80 CCD2
i have short term capital gain from shares of 1137 rs.
please advise which ITR form i should fill.
1. Yes you can take tax benefit on both home loans. From FY 2017-18 onwards loss on house property has been limited to Rs 2 lakhs - rest you can carry forward as losses for next 7 years.
2. You can split your contribution of NPS 50K each for 80CCD(1) and 80CCD(1B). You need not account for employer contribution as its not shown in Form 16 and hence tax free.
As you have short term capital gains you need to fill ITR 2.
Hi, I am Ashutosh, I have two home loans & both the homes are in Nasik, my parents are living in 1st home, my elder brother is living with his family in 2nd home, i am working in Pune. In this case can I get benefit of all two house loans & HRA
1st Home Loan belongs to myself only (Parents are living in this house)
2nd Home Loan I am applicant & my elder brother is co-applicant(Elder Brother living with his family in this house)
I am working in Pune & living in rented house
You can claim home loan tax benefit on both loans. Also you can get benefit of HRA. For more please read the following: Can I claim Tax Benefit on both HRA & Home Loan?
Is it require to shown as rental income even there is no rental income on both the houses ?
yes in case you have multiple house, you can show only one as self-occupied. For all others there has to be rental income (notional if not rented and real if rented)
Hello Amit,
I am about to pay around 3.5 lacs interest on home loan this financial year. My home is in different city than my work place and i will be getting around 1.5 lacs as rental income. Should i claim directly for 2 lacs (3.5 L-1.5L ) tax exemption for loss in property.
or i have to add 1.5 lacs in my income and tax exemption of 2 lacs in house interest separately.
Both rental income and home loan interest would have to netted off and filed under "Income from Home Property". Here is the calculation: Home Loan interest - 70% of rental income. So in your case Income from home = 70% of 1.5 - 3.5 = Rs (-)2.45 lakhs (loss)
Hi Amit
I paid rent to landlord son. Can I show his son pan no.
The rent should be paid to landlord. But as renter it might not be possible for you to verify who the property belongs to. You can quote son's name but you'll need a proof that this was on request of landlord.
Hi, I have my own Flat in Pune But it is far away from my company(100Km), so I move to place which is near to company. In this case can I claim exemption HRA as well as for Home loan?
Yes you can take benefit of both Home loan and HRA