For security reasons, your session has been timed out. To continue, Please login.
Tax Benefit on HRA
Many taxpayers shell out house rent but can’t claim deductions due to the absence of the house rent allowance (HRA) component in their salary. Under Section 80GG, you can avail of the benefit for the rent even if your salary package does not include HRA, provided you are not eligible for any housing benefit. You will not qualify for this break if you, your spouse or child owns the house you live in. The exemption is limited to the least of rent paid less 10% of total income; or Rs 5,000 a month or 25% of total income.
If you’re a salaried individual, you can claim House Rent Allowance (HRA) to meet your rented accommodation-related expenses. Salaried individuals who live in a rented house can claim this exemption and bring down their taxes. HRA can be fully or partially exempt from tax. Our HRA exemption calculator will help you calculate what portion of the HRA you receive from your employer is exempt from tax and how much is taxable.
If you don’t live in a rented accommodation but still get house rent allowance, the allowance will be fully taxable
For most employees, House Rent Allowance (HRA) is a component of their salary structure. Although it is a part of your salary, HRA, unlike basic salary, is not fully taxable. Subject to certain conditions, a part of HRA is exempted under Section 10 (13A) of the Income-tax Act, 1961.
The amount of HRA exemption is deductible from the total income before arriving at a taxable income. This helps the employee to save tax. But do keep in mind that the HRA received from your employer, is fully taxable if an employee is living in his own house or if he does not pay any rent.
Who can avail the tax benefit of HRA?
The tax benefit is available only to a salaried individual who has the HRA component as part of his salary structure and is staying in a rented accommodation. Self-employed professionals cannot avail the deduction.
How much of my HRA is exempt from tax?
The entire HRA received is not always fully exempt from tax. The least of the following three will be taken to exempt from tax:
The remainder of your HRA is added back to your taxable salary. Our calculator can easily help you figure out your HRA exemption.
The tax benefit is available to the person only for the period in which the rented house is occupied.
HRA exemptions can be availed only on submission of rent receipts or the rent agreement with the house owner.
It is mandatory for the employee to report the Pan Card of the ‘landlord’ to the employer if the rent paid is more than Rs 1, 00,000 annually.
Do’s and Don’ts of HRA tax exemption: