{"id":3439,"date":"2019-02-15T06:15:21","date_gmt":"2019-02-15T06:15:21","guid":{"rendered":"https:\/\/swaritadvisors.com\/learning\/?p=3439"},"modified":"2020-08-25T17:33:29","modified_gmt":"2020-08-25T12:03:29","slug":"house-rent-allowance-exemptions-rules-how-to-save-tax-on-it","status":"publish","type":"post","link":"https:\/\/swaritadvisors.com\/learning\/house-rent-allowance-exemptions-rules-how-to-save-tax-on-it\/","title":{"rendered":"House Rent allowance exemptions rules: How to save tax on it?"},"content":{"rendered":"\n<p class=\"has-drop-cap\">Before we proceed with <strong>House rent allowance<\/strong> <strong>exemption<\/strong> rules, it is necessary to know what is HRA? <strong>HRA forms<\/strong> an integral component of a person&#8217;s salary. It is paid by the employer to its employees. House rent allowance exemption can only be claimed if the employee is residing in a rented house. <\/p>\n\n\n\n<p>In this blog, we will discuss all <strong>aspects of House rent allowance<\/strong> and rules relating to <strong>HRA exemption<\/strong>.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a3a61b36ba3b\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a3a61b36ba3b\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/swaritadvisors.com\/learning\/house-rent-allowance-exemptions-rules-how-to-save-tax-on-it\/#What_is_House_Rent_Allowance\" title=\"What is House Rent Allowance?\">What is House Rent Allowance?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/swaritadvisors.com\/learning\/house-rent-allowance-exemptions-rules-how-to-save-tax-on-it\/#Is_House_rent_allowance_exempted_from_Income_tax\" title=\"Is House rent allowance exempted from Income tax?\">Is House rent allowance exempted from Income tax?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/swaritadvisors.com\/learning\/house-rent-allowance-exemptions-rules-how-to-save-tax-on-it\/#Who_is_entitled_to_claim_the_House_Rent_exemption\" title=\"Who is entitled to claim the House Rent exemption?\">Who is entitled to claim the House Rent exemption?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/swaritadvisors.com\/learning\/house-rent-allowance-exemptions-rules-how-to-save-tax-on-it\/#How_can_one_calculate_HRA_tax_exemption\" title=\"How can one calculate HRA tax exemption?\">How can one calculate HRA tax exemption?<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/swaritadvisors.com\/learning\/house-rent-allowance-exemptions-rules-how-to-save-tax-on-it\/#Special_circumstances_where_HRA_tax_benefits_can_be_claimed\" title=\"Special circumstances where&nbsp; HRA tax benefits can be claimed \">Special circumstances where&nbsp; HRA tax benefits can be claimed <\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/swaritadvisors.com\/learning\/house-rent-allowance-exemptions-rules-how-to-save-tax-on-it\/#A_person_owns_a_house_but_staying_in_a_different_city\" title=\"A person owns a house but staying in a different city\">A person owns a house but staying in a different city<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/swaritadvisors.com\/learning\/house-rent-allowance-exemptions-rules-how-to-save-tax-on-it\/#Is_it_possible_to_claim_exemption_on_House_rent_allowance_at_the_time_of_filing_Income_Tax_ReturnITR\" title=\"Is it possible to claim exemption on House rent allowance at the time of filing Income Tax Return\/ITR?\">Is it possible to claim exemption on House rent allowance at the time of filing Income Tax Return\/ITR?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/swaritadvisors.com\/learning\/house-rent-allowance-exemptions-rules-how-to-save-tax-on-it\/#How_one_can_claim_HRA_exemption_at_the_time_of_filing_ITR\" title=\"How one can claim HRA exemption at the time of filing ITR?\">How one can claim HRA exemption at the time of filing ITR?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/swaritadvisors.com\/learning\/house-rent-allowance-exemptions-rules-how-to-save-tax-on-it\/#How_much_HRA_is_exempted_under_section_10_13_of_the_Income_Tax_Act_1961\" title=\"How much HRA is exempted under section 10 (13) of the Income Tax Act, 1961? \">How much HRA is exempted under section 10 (13) of the Income Tax Act, 1961? <\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/swaritadvisors.com\/learning\/house-rent-allowance-exemptions-rules-how-to-save-tax-on-it\/#Deduction_of_HRA_under_section_80GG_of_the_Income-tax_Act_1961\" title=\"Deduction of HRA under section 80GG of the Income-tax Act, 1961\">Deduction of HRA under section 80GG of the Income-tax Act, 1961<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/swaritadvisors.com\/learning\/house-rent-allowance-exemptions-rules-how-to-save-tax-on-it\/#Documents_required_for_claiming_House_Rent_Allowance_exemption\" title=\"Documents required for claiming House Rent Allowance exemption\">Documents required for claiming House Rent Allowance exemption<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_House_Rent_Allowance\"><\/span><strong>What is House Rent Allowance?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>HRA is considered as a part of the salary which is provided by an employer to his employee for his rental accommodation. Employers decide the amount of HRA&nbsp; based on the salary of the employee and the city of residence.<\/p>\n\n\n\n<p>Only salaries of persons can claim <strong>tax benefit relating to HRA<\/strong>.&nbsp; It offers tax benefits to the employees in respect of the amount paid towards rental accommodations.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Is_House_rent_allowance_exempted_from_Income_tax\"><\/span><strong>Is House rent allowance exempted from Income tax?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Though <strong>House rent allowance<\/strong> is considered as a part of the salary,&nbsp; unlike basic salary, it is not fully taxable. Subject to certain conditions, a part of <strong>House rent allowance is liable to be exempted, u\/s.10 (13 A)&nbsp; of the Income-Tax Act, 1961<\/strong>. Amount of <strong>HRA<\/strong> shall be deductible from the taxable income.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Who_is_entitled_to_claim_the_House_Rent_exemption\"><\/span><strong>Who is entitled to claim the House Rent exemption?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Where any employee receives <strong>HRA<\/strong> as a part of his salary and lives in a rented accommodation, then that particular&nbsp; employee is entitled to &nbsp;claim <strong>full or partial exemption u\/s.10 of the Income Tax Act, 1961<\/strong>.<\/p>\n\n\n\n<p>However, HRA is fully taxable if an employee doesn&#8217;t live in rented accommodation and such an employee is no more entitled to <strong>claim house rent allowance exemption<\/strong>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_can_one_calculate_HRA_tax_exemption\"><\/span><strong>How can one calculate HRA tax exemption?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Calculation of <strong>House rent allowance<\/strong>&nbsp; depends on four factors as listed below:<\/p>\n\n\n\n<p>1) Salary<\/p>\n\n\n\n<p>2) HRA component of salary<\/p>\n\n\n\n<p>3) Rent paid<\/p>\n\n\n\n<p>4) Location of rented residence<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Special_circumstances_where_HRA_tax_benefits_can_be_claimed\"><\/span><strong>Special circumstances where&nbsp; HRA tax benefits can be claimed <\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>In&nbsp; certain scenarios, one can <strong>claim HRA tax benefit<\/strong> such as:<\/p>\n\n\n\n<ul><li> <strong style=\"font-size: 1em;\">Paying rent to family members<\/strong> <\/li><\/ul>\n\n\n\n<p>Rent premises shall not be owned by the person <strong>claiming tax exemption<\/strong>. If anyone stays with parents and pays rent to them, then only he can claim the same for <strong>tax deductions as HRA<\/strong>.<\/p>\n\n\n\n<ul><li><h4><span class=\"ez-toc-section\" id=\"A_person_owns_a_house_but_staying_in_a_different_city\"><\/span><strong>A person owns a house but staying in a different city<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h4><\/li><\/ul>\n\n\n\n<p>If a person owns the house and rents it out, however, due to job requirements he is staying and working in another city, then he can get the <strong>benefits of tax deduction available for House rent allowance<\/strong>.<\/p>\n\n\n\n<ul><li> <strong style=\"font-size: 1em;\">A person owns a house but stays in a rented house in the same city<\/strong> <\/li><\/ul>\n\n\n\n<p>In this scenario, you have to justify the reason for not staying in your own house. Circumstance arises that the office location is very far from the house you own. If this is the circumstance, then you can <strong>claim both HRA and Home loan benefits<\/strong>.<\/p>\n\n\n\n<p>Note, however, while claiming a tax deduction, one must keep in mind that the individuals a member of the Hindu undivided family or his spouse&nbsp; or minor child&nbsp; must not own any accommodation.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Is_it_possible_to_claim_exemption_on_House_rent_allowance_at_the_time_of_filing_Income_Tax_ReturnITR\"><\/span>Is it possible to claim exemption on House rent allowance at the time of filing Income Tax Return\/ITR?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><strong>Exemption against House rent<\/strong> is available when an employee is living in rental accommodation and pays rent to the landlord. An employer shall <strong>deduct TDS on HRA<\/strong> without allowing an exemption to the employee. Moreover,&nbsp; an employee can <strong>claim exemption on House rent allowance<\/strong> at the time of <strong><a href=\"https:\/\/swaritadvisors.com\/income-tax-return-filing\">filing an income tax return<\/a><\/strong>.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_one_can_claim_HRA_exemption_at_the_time_of_filing_ITR\"><\/span><strong>How one can claim HRA exemption at the time of filing ITR?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>To <strong>claim HRA<\/strong>, you have to <strong>submit an income declaration form (Form 12BB) to your employer<\/strong>. However, in case, you fail to furnish the <strong>necessary details in Form 12BB<\/strong>, then you have the option to submit it at the time of <strong>filing the ITR<\/strong>.<\/p>\n\n\n\n<p><strong>For claiming HRA exemption, while filing ITR, you need to follow the below steps:<\/strong><\/p>\n\n\n\n<ul><li>Calculate the amount <strong>eligible for HRA exemption<\/strong><\/li><li>Deduct the calculated amount from your salary income<\/li><li>Mention this <strong>income in ITR<\/strong>.<\/li><\/ul>\n\n\n\n<p>However, we will suggest you to timely provide the required information in the Form because this will save your time and money.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_much_HRA_is_exempted_under_section_10_13_of_the_Income_Tax_Act_1961\"><\/span><strong>How much HRA is exempted under section 10 (13) of the Income Tax Act, 1961? <\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Under Section 10(13) of the <strong>Income Tax Act<\/strong> <a href=\"https:\/\/www.incometaxindia.gov.in\/\">[1]<\/a> , you can <strong>claim HRA exemption<\/strong> on the amounts as discussed below:<\/p>\n\n\n\n<ul><li>Actual <strong>House rent allowance<\/strong> that an employee received from the employer;<\/li><li>Actual rent paid if <strong>reduced by 10% of the salary<\/strong>;<\/li><li>50% of the basic salary in case the taxpayer is living in a metro city;<\/li><li>40% of the basic salary if the taxpayer is living in a non-metro city;<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Deduction_of_HRA_under_section_80GG_of_the_Income-tax_Act_1961\"><\/span><strong>Deduction of HRA under section 80GG of the Income-tax Act, 1961<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Some employees may not have <strong>HRA<\/strong> as part in their salary structure. Also a non-salaried individual pays rent<\/p>\n\n\n\n<p><strong>Section 80GG of the Income Tax Act<\/strong> is introduced to help people who fall under such categories.<\/p>\n\n\n\n<p>An individual who pays rent for a furnished\/unfurnished accommodation can <strong>claim the deduction for the rent paid under section 80GG<\/strong>. However, the condition is that no HRA is paid to that individual as part of his salary.<\/p>\n\n\n\n<p><strong>Under the section of the 80GG, list of the following is available for exemption from tax:<\/strong><\/p>\n\n\n\n<ol><li>Payment of Rent in excess of 10% of the total income.<\/li><li>25% of the adjusted total income.<\/li><li>Rental income Rs.5000 per month.<\/li><\/ol>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Documents_required_for_claiming_House_Rent_Allowance_exemption\"><\/span>Documents required for claiming House Rent Allowance exemption<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>To <strong>claim house rent allowance<\/strong> one has to submit documents as listed below:<\/p>\n\n\n\n<ol><li>Employees who seek to <strong>claim HRA<\/strong> needs to <em>submit a<\/em><strong> <a href=\"https:\/\/swaritadvisors.com\/residential-rental-agreement\">rent agreement<\/a><\/strong> for the current financial year.<\/li><li>Submission of a duly stamped rent receipt filled either monthly or quarterly is necessary. However, if the rent paid is less than 3000 per month, then there is no necessity of any rent receipt.<\/li><li>If annual rent exceeds Rs 1 lakh, then the employee has to <strong>submit the pan card<\/strong> of the landlord for <strong>purpose of claiming House Rent Allowance<\/strong>.<\/li><li>Where a landlord does not have a PAN card, then in this regard<\/li><li>the tenant requires to <strong>obtain a declaration from<\/strong> him along with his name and address details.<\/li><li>An employee needs to <strong>submit Form 12BB<\/strong> to his employer in order to <strong>claim exemption on HRA<\/strong>.<\/li><li>Address of the rented<\/li><li>Revenue stamp.<\/li><li>Landlord&#8217;s signature on the revenue stamp.<\/li><li>Name of the tenant.<\/li><li>The photocopy\/Xerox of the rental agreement, if required.<\/li><\/ol>\n\n\n\n<p><strong>Conclusion<\/strong><\/p>\n\n\n\n<p><strong>House rent allowance<\/strong> is an important element in an employee&#8217;s salary as it provides <em>tax benefits for payment made on rental accommodation<\/em>. <strong>Provision of section 10(13A) of the Income-tax Act<\/strong>, regulates the <strong>HRA in India<\/strong>.<\/p>\n\n\n\n<p>Swarit Advisor has a perfect customer relationship management system with an aim to provide complete customer satisfaction by providing quality and customized service to every customer.<\/p>\n\n\n\n<p>In case you are willing to avail the <strong>benefit of HRA<\/strong> or if you have any doubt in your mind then <strong><a href=\"https:\/\/swaritadvisors.com\/contact-us\">contact us<\/a><\/strong>.<\/p>\n\n\n\n<p class=\"text-left\"><b>Also, Read<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/swaritadvisors.com\/learning\/tax-exemption-to-section-8-company\/\">Tax Exemption to Section 8 Company<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Before we proceed with House rent allowance exemption rules, it is necessary to know what is HRA? HRA forms an integral component of a person&#8217;s salary. It is paid by the employer to its employees. House rent allowance exemption can only be claimed if the employee is residing in a rented house. In this blog, [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":3440,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[416],"tags":[366],"_links":{"self":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/3439"}],"collection":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/comments?post=3439"}],"version-history":[{"count":13,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/3439\/revisions"}],"predecessor-version":[{"id":12505,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/3439\/revisions\/12505"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/media\/3440"}],"wp:attachment":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/media?parent=3439"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/categories?post=3439"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/tags?post=3439"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}