Tax Benefit on HRA - House Rent Allowance
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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can i claim house rent for the house me n my husband live in , rent agreement is on my husbands name.is there any way to claim that ?
Kritika if the rent agreement is on husband's name then the landlord would issue receipt on his name so you would not be able to claim HRA. The only way to claim this is to get a new agreement on your name or joint and then landlord would issue receipt accordingly.
Hi Amit,
I live in bangalore in my own apartment (Loan fully repaid and closed). Can I claim tax rebate with regard to the monthly maintenance charges paid to the apartment owners association?
Thanks
Sorry but there is no rebate on maintenance charges paid to society.
Thanks for the clarification
Hi,
I have purchased a residential site (plot) through Bank Loan. Bank has sanctioned this loan as 'Home loan' which is eligible to claim under section 80C and Section 24 (b) of Income-tax act. Bank also gives the "Certificate for claiming deduction u/s 80c (2)(xviii) & 24(b) of Income-tax Act, 1961" for claiming deduction. The building is not yet constructed on the site.
I am staying in a rented house & paying rent. Can i claim both HRA as well as Home loan interest?? Please advise.
Yes you can claim HRA benefit.
As the building is not complete you cannot claim tax exemption on payment of interest/principal on Home Loan.
Hi Amit,
1)I live in Bangalore and pay rent to my mother in law. I have a flat in Bangalore that is rented out and Im paying the loan - can I claim HRA, Interest on loan and Principal?
2) Since my tenant cannot claim tax exemption on maintenance - she shows the whole amount as rent, and I pay maintenance to the association directly, can I claim exemption on maintenance?
1. Yes you can claim tax benefit on both HRA & Home Loan Repayment in terms of Principal & Interest.
2. You cannot claim separate exemption on maintenance paid to society because while calculating income from rent, 30% standard deduction is already provided for repair and maintenance, irrespective of you actually spend on those.
hope it helps.
Thank you for your prompt and clear response!
Hi Amit,
House Property & Loan Details:
• Bought a constructed house and is registered under my name only.
• Joint Housing Loan taken by me & My Spouse.
Section-24
1. How to claim Tax exemption for Interest paid on Housing Loan by me & my spouse as well?
80C
2. Is my Spouse eligible to claim exemption on the Principal amount paid on Housing Loan?
3. I noted that Stamp Duty & Registration charges could be claimed under 80C. We have spent around 3.0Lacs for the same. Is it possible for both of us (I & my Spouse) to claim exemption by splitting the amount (1.5L + 1.5 L)
80D / 80DDB
4. Is it possible to claim the amount spent on complete Blood test for the dependent in Bio-Lab as Preventive Health-check up? If possible please share the limit.
5. Is it possible to claim the amount spent on Dental Treatment – Root Canal / Crowning? If possible please share the limit.
Thanks & Regards
The Tax exemption under Sec 24 can only be claimed the person on whose name the house is registered. So in your case your spouse cannot claim any tax benefit on this house. The above statement is true for all sections of income tax exemption. So no tax benefit for your spouse u/s 80C as well.
u/s 80D you can claim up to Rs 5,000 for preventive health checkup for you and your dependents. I am not sure if Blood test as stated by you can be claimed as preventive health checkup ... because as per definition it should not be done for curing any disease.
Root Canal would not qualify for deduction u/s 80DDB as this covers life threatening/ serious conditions like AIDS, Chronic renal failure, etc
Hi,
I share apartment for rent with my friends. I pay Rs 4k as rent which is part of my share.
My basic is Rs 40k. There is HRA component in my salary.
So if I calculate HRA tax exemption it comes Rs4k - (10% of 40k) = Rs 0
Whether I am not eligible to claim tax exemption for the rent I pay?
Yes you are eligible for HRA but if the rent is higher than Rs 4,000 ....
Hi ,
I m working as resident doctor in jodhpur. Govt give me payment in two part one is salary & other is stayfund. There is no mention of HRA in payment .I live in on rent house in JODHPUR (RAJASTHAN) .Can I claim for HRA in INCOMETAX return.Please guide me.
Thanks
If HRA is not mentioned in your Appointment letter of Salary slip then you would not be able to take tax benefit for HRA. But you claim exemption for House Rent up to Rs 2,000 u/s 80GG. The House Rent deduction u/s 80GG is minimum of the 3 numbers:
Rs. 2,000 per month
25% of annual income
(Rent Paid - 10% of Annual Income)
I have changed my rented flat in July-13 and paying 20K as rent and have PAN card of landlord.
So no prob for the period of Jul-13 to Mar-14.
BUT for the period Apr-13 to Jun-13 I was living in another flat where i was paying 14.5 K
I was not aware of the rule till now.
I thought for those 3 months no PAN card is required.
What should i do now.
Previous landlord has denied to give details of PAN card.
How should I proceed for HRA exemption ??
Unfortunately you cannot do much about it except for convincing landlord to give his PAN cad Number.
I am paying EMI Rs24552 towards home loan (Rs21L) taken in July2012. The interest limit on home loan has been increased from 1.5L to 2.5L in the Feb2013. In order to maximise the rebate what should be done during 2013-14, please suggest.
Hi Amit,
Thank you for the clarification. I'm paying 8000 per month towards rent but I'm not taking any kind of receipt from my landlord. I'm paying in cash. When I'm submitting my Proof of investment I'm asking the landlord to sign on the receipt provided by the employer.
Is there any way can I take monthly receipt from the landlord?
Thank you
Kishore
Yes you can tell your landlord to give you rent slip. Its your right!
If you are looking for rent slip formats just search for it on google and you would get plenty of them. Just print them and tell your landlord to fill it up and sign it as rent receipt.