Frequent asked Questions on HRA
HRA is a special allowance provided by an employer to their employees towards payment of rent for residence of the employee. HRA forms part of salary of the employee
HRA exemption is covered u/s 10(13A). HRA granted to employee is exempted to the extent of 'least' of the following.
- HRA received from the employer.
- Rent paid – 10% of Salary.
- 40% of Salary other than Metro Cities (50% of Salary in case of Metro Cities i.e., Delhi, Kolkata, Mumbai and Chennai).
Salary means Basic Salary + Dearness Allowance.
No, you cannot claim HRA exemption if you are living in your own house.
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Yes, you can claim both HRA and Home Loan but you need to prove that the house for which you are paying rent and the house for which you are paying home loan are at different places.
No, you cannot claim maintenance charges as part of rent to claim HRA exemption. HRA can be claimed only on the rent paid.
Maintenance charges may mean Home Owners Association (HOA) Fee, Apartment / Flat maintenance Fees, Common Area Maintenance (CAM) Charges etc. cannot be included in the rent amount for the purpose of HRA calculation.
The Taxpayer needs to have Rental Agreement and Rent receipts as proof of evidence to claim HRA exemption. If the rent exceeds Rs 1 lakh, the taxpayer needs to submit the PAN of Landlord to the employer.
However, the PAN of the landlord and the rental receipts are not required at the time of the Income Tax Filing, unless the tax department requested to upload for scrutiny.
No. you cannot claim HRA u/s 10(13A) if you are not receiving HRA from your Employer. But you can claim Deduction u/s 80GG for Rent paid.
The taxpayer can claim least of the following as deduction.
- Actual rent paid – 10% of total income of assessee.
- 25% of such total income
- Rs. 5000 per month
Note: Total Income means net income after deducting all deduction u/s Chapter VIA but before making any deduction u/s 80GG.
You may refer more about Section 80GG @ Deduction in respect of Rent Paid (80GG)
- Basic Pay – 40000
- HRA – 12000
- Special Allowance – 15000
- Conveyance – 1600
- Total Basic Salary = Rs. 480000
- Total HRA = Rs. 144000
- Total Rent Paid = Rs. 180000
- HRA received from the employer = 144000
- Rent paid – 10% of Salary (Basic + DA) = 180000 – 10% (480000) = 180000 – 48000 = 132000
- 40% of Salary (Basic + DA) = 40% * 360000 = 144000
Taxable HRA is Rs 12000 (in his case)
When we are paying a rent to an NRI, the tenant needs to deduct the taxes @ 31.2% (30% + 4% of 30% as Education Cess) and pay as a challan to the government, and file the TDS Returns (Form 27Q) with Owner's PAN number. Contact Team EZTax.in for help in preparing and filing your TDS
Irrespective of whether TDS deducted or not, the total rent in the rent receipt or rental agreement should not change.
In the same lines, the total rent declared for the calculation of HRA would not change as well.
The TDS need to be deducted at the rate of 5% on the total rental value for that year and pay as a challan to the government, and file the TDS Returns (Form 26QC) with Owner's PAN number. Contact Team EZTax.in for help in preparing and filing your TDS
When deducting TDS and paying the challan, the total rental value would not change for the rental agreement or HRA calculation or employer declaration etc.
