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The HRA is claimed by the Salaried individuals who live in a rented house. This is allowed as a deduction to an extent allowed pursuant to the Income-tax Act, and hence thereby lower are the taxes to be paid by the taxpayer. The employer provides for the house rent allowances for the expenses related to rented accommodation. However, in cases you don’t live in a rented house, this allowance is fully taxable.
The deduction allowed with respect to the HRA is the least of the following amounts:
Then in the above case, the allowable HRA shall be Rs 15,000/-.
In case you are living in the house on rent and the rent for the same is more than of Rs 1, 00,000/- annually in such cases the renter is required to obtain the landlord’s PAN and same is required to be mentioned while claiming the deduction for the HRA.
In that case, also the renter should not forget to pay the rent only after deducting the TDS of 30%, otherwise, you lose out on the HRA exemption.
In case your Landlord does not have a PAN, then, in that case, a declaration refers to circular no. 8/2013 dated 10 October 2013 is required to be given by the landlord.
Usually, it’s a myth that if the interest on own House Rent Allowances are claimed as deduction them one cannot claim the HRA, however, this is not true one can claim both the things simultaneously and it has no bearing towards the home loan interest deduction.
Also, Read: All About Deduction Under Section 80GG.
In the case where the employee is living in a rented House Rent Allowances and paying rent for residential accommodation (be it furnished or unfurnished), but do not receive HRA from his or her employer, in such cases also still one can claim deduction under Section 80GG.
However certain conditions must be fulfilled to claim this deduction:
The deduction under 80GG can be claimed under 80 GG will be least of the following:
Let’s understand with an Illustration:
Mrs. X works at a PQR company. The PQR company pays HRA to all its employees provides. But she is not living out of rented place but with her parents? Can she still claim HRA as a deduction?
Mrs. X can claim the deduction of such HRA if following things happen:
However, this makes Mrs. X parents show their extra house rental income on which tax shall be charged.
Do the E-filing of your ITR through Enterslice experts, and we assure you to make the best of deductions, fastest delivery of services and maximum return to you. To file E-return or for more information or contact click here
Also, Read: Read CBDT Clarifications for ITR Filing of AY 2019-2020.
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