HRA(House Rent Allowances) HRA exemption can be claimed under section 10(13A) of the Income-tax Act, 1961. To calculate this exempted amount, lowest of these...
HRA(House Rent Allowances) HRA exemption can be claimed under section 10(13A) of the Income-tax Act, 1961. To calculate this exempted amount, lowest of these three is considered:
1) Actual HRA received from the employer,
2) 50% of salary if employee lives in a metro city; and 40% if the employee lives in a city other than a metro, and 3) actual rent paid minus 10% of salary (basic plus dearness allowance plus turnover-based commission).
We will talk about situations where you can lawfully claim both deductions: Situation
1. You own a house in same city but you live in a rented premise There might be the possibility that your office is too far and it takes too much time to reach office and that’s one of the reasons to stay near to your office so that you can serve your duty hassle free. But in this case please remember that you must show income of your rental premise in your income tax return (ITR). If your own house is vacant, then show in “nominal value”. Situation
2. If you are staying in different city other than the place where your own house is situated. Then you can claim both (HRA, Home-Loan interest and capital) without any problem. Situation
3. If you are staying in the property of your parents or spouse (property owned by parents and spouse respectively). If you are staying with your parents/spouse then property must be owned by parent/spouse. And you must pay monthly rent or timely rent to the owner (parent/spouse). Also the receiver of the rent (parents/spouse) is responsible to file ITR and disclose this income in their respective ITR. In case, if you are paying annual rent more than INR 100,000 (One Lakh) then you have to submit owner’s PAN (parents/spouse) to your employer. Note of Caution: Such kind of claim is generally on the eye of tax authority, so be careful on documentation parts. Situation
4. If you are staying in your own house: If you are staying in your own house then you cannot claim HRA (House Rent Allowances) and Home Loan both.
