The HRA or House Rent allowance is compensation provided by the employer to the employee to meet the cost of renting a home in the city of the workplace. The deduction for HRA is generally availed by the employee through the payroll by providing requisite supporting documents and also, meeting the necessary conditions.
The exempt HRA amount can be seen in the tax projection statement provided to you by your employer at the beginning of the financial year. The employer deducts the HRA from the salary. When it comes to filing the ITR, you can view the deduction in Part B of your Form 16. In case you miss claiming the HRA while filing a return, you can file a revised return to correct the error before the end of the assessment year.
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WHO CAN CLAIM HRA EXEMPTION:
Salaried employees who receive house rent allowance as a part of their salary and make payment towards rent can claim HRA exemption to reduce their taxable salary wholly or partially.
HERE IS HOW TO CLAIM TAX EXEMPTION ON HRA:
To claim the HRA exemption, you are first required to calculate how much of the allowance is taxable. The tax exempt portion of HRA comes out to be Rs 1.26 lakh whereas the balance of Rs 54,000 is the taxable part.
HRA exemption can be claimed by mentioning the amount in the declaration form provided to you by your employer at the start of a financial year. In case the employee is unable to claim the same through the employer, you can claim HRA by filing your taxreturns using the ITR-1 form.
If you have taken a house on rent and are making a payment in excess of Rs 1 lakh annually, remember to provide the landlord’s PAN. Else, you may lose out on the HRA exemption.
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ELIGIBILITY CRITERIA TO CLAIM HRA:
- You must be a salaried employee.
- You must have the HRA component in your salary structure.
- You must be living in rented accommodation.
NOTE:
You need to provide rent receipts and the rent agreement to claim HRA exemption. You can also claim exemptions if paying rent to your family members.
