The House rent deduction criteria is different for residence of Delhi/Kolkata/Mumbai/Chennai



What is HRA?

In simple word, it’s stands for house rent allowance. This is an amount given by the employers to their employees as an allowance in addition to the basic salary. Usually, HRA helps the employees in getting a suitable residential accommodation at their place of residence. Going by the provisions of Section 10(13A) of the Income-tax Act, the amount gets fixed by the employer depending on the salary of the employee and place of residence. The important point is house rent allowance is only available for the salaried employees.

As a rule, if an employee is living in a rented accommodation and the rent in a particular year is more than 1 lakh rupees, then the employee would need to furnish the PAN details of the house owner.

Facts

House rent allowance gets calculated on the basis of two rules

  1. If the employee is staying in a metro city, he would get 50% of its basic salary as HRA. If he is staying in a non-metro city, he or she would get 40% of his basic..
  2. The lowest sum from the three categories is considered as the rent allowance. Either the sum obtained from the employer. Secondly, it is the actual rent paid 10% of the basic salary. The last option is, it also could become 50% of the basic salary for the metro cities or 40% of the basic salary for the non-metro cities. It’s gets calculated either one of the three options.

What is the advantage of HRA?

As it gives tax benefits, it gives the biggest benefit of having the reduction in taxable income. An employee working in India can take the advantage to get tax exemption.

So, now its clear how HRA calculator works, you can use above given tool to find the tax exemption limit for the Financial Year 2016-2017.

Please check this http://persmin.gov.in/ to know more about and regulation rules in details.

What documents require to submit to get Claim?

If you are going to claim for HRA then make sure that you must have a rent receipt which must be duly signed by the owner along with Rs 1 revenue stamp. Please note that the owner needs to sign over revenue stamp. The rent receipt should include the house address and the date. No need to submit all 12 months of rent receipt, April month of last year and March month of current year receipt will work. In case if you don’t have the receipt then you can download the house rent receipt here.

Is Pan Card required of my Landlord?
If you are living in a rented house and wanted to avail the exemption then you will have to provide the landlord pan number in case total rent is more than Rs 1 lakh in any financial year.

I own a house and living there, can I still claim for rent allowance?
The answer is straight forward NO, if you own a house then you can’t claim for the same.

Do i need to include house rent receipt on my Income Tax Return file?
If the monthly rent is less than Rs 3,000 then no need to provide house rent receipt however if the house rent is more than INR 3,000 then you will have to show the last 03 month (Jan, Feb, March) house rent receipt along with landlord signature.

I am self-employed, can I also claim?
There is a good news, professional and self employed can also claim under section 80GG.

I already taken Home loan and getting tax benefit, can I also claim for the HRA?
You should be happy to know that you can claim for both. If you own a house, paying the loan and living in a rented house then you can avail the tax benefit from both side.

I just forgot to submit the hour rent receipt to my employer, what to do?
If somehow you forget to provide the house rent receipt to your employer then nothing to worry, since you can also submit the rent receipt when filing the yearly income tax return.

In case if you don’t receive the rent allowance from your employer, then also you can claim a sum of Rs 60,000 as deduction as per the section 80GG

Also please note that if the actual rent that you are paying is less than the 10% of your basic salary then you won’t get the exemption.