financial services · Income Tax · income tax return

Basic HRA Exemption Rules

Exemption image 2

Did you ever think, that paying rent can lead to some tax exemptions, if not then you must know about HRA Exemption. Here are a couple of things that you need to know about HRA Exemption in India.

How is HRA Exemption calculated?

The deduction available is the least of the following amounts: –

  1. Actual HRA received
  2. 50% of (basic salary + DA) for those who live in metro cities
  3. 40% of (basic salary + DA) for those who live in non-metro cities
  4. Actual rent paid less 10% of basic salary + DA

Can I claim HRA Exemption on Home Loan?

Yes, a taxpayer can claim house rent allowance, as it has no bearing towards your home loan interest deduction. Both can be claimed. Try out our free HRA calculator and calculate your HRA exemption accurately, in just a couple of seconds. This calculator shows you how much of your HRA is taxable and how much is exempt from tax.

What to do when you employer does not give you HRA Exemption?

If you paying rent for any furnished or unfurnished residential accommodation occupied by you, but do not receive HRA from your employer, you can still claim the deduction and you can do this under Section 80GG.

Conditions that must be fulfil in order to claim HRA are as follows:

  1. You are self-employed or salaried
  2. You have not received HRA at any time during the year for which you are claiming 80GG
  3. You or your spouse or your minor child or HUF of which you are a member, do not own any residential accommodation at the place where you currently reside, perform duties of office, or employment or carry out business or profession.

In case, you own a residential property at any place other than the place mentioned above, then you should not claim the benefit of that property as self-occupied. That other property would be deemed to be let out in order to claim the deduction under section 80GG.

Moreover, you can use our Rent Receipt Generator, in order to Generate Rent Receipt.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s