HRA (house rent allowance) means is the amount paid by the employer to employee for the rent of the resident house of employee it is a part of salaries. The decision of how much to pay HRA is depends on the employer. The amount of such HRA is deductible under section 10(13A). The amount of deduction allowed under this provision is least of the following:

 

  • HRA received
  • 40%/50% of salary (Based on place you reside In case of Metro it is 50% else it is 40%)
  • Actual rent paid less 10% salary

 

1) Who can claim HRA?

 

Everyone cannot claim HRA. HRA is allowed to those people who are living in a rented accommodation. It is applicable to salaried persons. Self-employed assessees and also assessees having their own house are not eligible for claiming HRA.

 

2) Can you Claim HRA at the time of Filing Returns and get Refund?

You can Claim HRA even if you missed to Submit Proof to your Employer. Employers ask proof such as Bank Statement showing Rent Paid, Rent Receipt and Rent Agreement. In case you have failed to submit the Proof to your employer on time he may deduct higher amount of Taxes without giving HRA benefit. All you have to do is at the time of filing of returns you have to compute HRA based on the above formula. Calculate the benefit and claim at the time of filing returns. Your Return will be processed and you will get refund from Income Tax Department. Do not forget to keep following documents ready at the time of scrutiny – Agreement of Rent, Rent Receipts and Bank Statement Showing rent paid.

 

3) Can I pay rent to my parents to avail HRA benefits?

 

Yes, you can avail benefits of HRA if you pay the rent to your parents. But, at the same time your parents must have accounted it in their taxable income for the year. On the other hand you cannot pay rent to your spouse. In view of the relationship when you take up residence together, you are expected to do so and hence such a transaction does not bear merit under the income tax laws. Such transactions can only spell trouble under scrutiny, so avoid doing these.

 

4) What proof need to be submitted for claiming HRA?

If you’re monthly HRA is less than 3000 then you need not required to submit any proof.

But, in case you’re monthly HRA is > than 3000 and rent is <=8333 then you must submit the following to your company:

  • Original rent receipt of the beginning and end of the year. Please Note that any rent revision during the year would need to be supported with a fresh receipt.
  • A copy of lease agreement in absence of lease agreement, rent receipt should contain the Cheque / EFT details and additional supporting document like bank statement extract to be provided.

 

If in case you’re monthly HRA is > than Rs.3000 and rent is greater than Rs.8333 then you must submit the following to your company:

  • Original rent receipt of the beginning and end of the year. Please Note that any rent revision during the year would need to be supported with a fresh receipt.
  • A copy of lease agreement in absence of lease agreement, rent receipt should contain the Cheque / EFT details and additional supporting document like bank statement extract to be provided.
  • PAN of the land lord/ declaration if he/she does not have a PAN.

 

 

For any query you can write to Chirag@cachauhan.in  before making any decisions do consult your Professional / tax advisor. For misrepresentation or interpretation of act or rules Author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on.

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