House Rent Allowance

House Rent Allowance-Exemption and common doubts

For employed person house rent allowance is a major part of their salary. A common salary structure of an organization consists of Basic + HRA + Allowances. HRA consists of almost 50% of the basic salary. If a person is getting Rs.100,000 salary per months then a common salary structure will be as following:

  1. Basic                       –    Rs.50,000
  2. HRA                         –    Rs.25,000
  3. Other Allowance      –    Rs.25,000

Employers provide the HRA to the employees to meet their accommodation expenses and the employee can claim the HRA deduction for tax saving purpose. Therefore, it is very important to understand the HRA.

House Rent Allowance can be claimed only to the extent of least of the following:

(A)  50% of Basic Salary and DA if you are living in a metro city. Metro City is Delhi, Mumbai, Kolkata and Chennai. 40% of Basic Salary and DA if you are living other than non-metro city.

(B) Actual HRA received

(C) Excess of rent paid over 10% of salary

Followings are the common Questions and their Answers on House Rent Allowance

Q. I am living in my own house; can I still claim HRA?
A. You cannot claim HRA if you are living in your own house.
Q. Is it mandatory to produce rent receipts for claiming HRA?

A. If your monthly rent is less than Rs.3,000 then you need not to produce rent receipts. But if you are paying your monthly rent more than Rs.3,000 then it is mandatory to produce rent receipts.

Q. Can I claim HRA for more than one houses?

A. No, you can claim HRA benefit for only one house in the city where you are working.

Q. What are the documents required for getting HRA exemption?

A. You will have to produce the rent receipts for getting the HRA exemption.

Please Note: If the annual rent exceeds Rs.100,000 then either the PAN card of the landlord or a written consent from the landlord is required stating the PAN is not available with the landlord.

Q. Can electricity charges paid, be claimed with HRA?

A. Electricity charges cannot be claimed with HRA since it is not the income to the landlord, it is to be paid to the electric provider.

Q. Can I claim my HRA without landlord’s PAN card if I am paying more than Rs.100,000 per year?

A. It is mandatory for the employee to obtain the PAN card from the landlord. If the landlord does not have a PAN card, a declaration from the landlord is required to submit having landlord’s name, address, the amount of rent, then only you can claim your HRA.

Q. When HRA is applicable?

A. HRA is a part of the salary given by your employer. Your salary breakup should show HRA separately. Then only you can claim your HRA. In this way it helps the employee to claim the HRA benefit.

Q. I am self-employed, can I claim HRA benefits?

A. No, Self-employed person is not getting salary from the employer. Therefore, he cannot claim HRA. But a self-employed person can claim the house rent expenses he is paying under Section 80GG.

Q. How can I claim HRA if I lived some months in non-metro city and some months in metro city in a year?

A. You can claim your HRA based on the period you lived in metro city and non-metro city.

Q. Can I claim HRA benefits if I pay rent to my father?

A. Yes, you can claim HRA benefits if you pay rent to your father. But your father will become liable to taxable income for that amount of rent paid by you.

Q. Can I avail tax benefits of HRA if I am living in my spouse house?

A. No, you cannot take the benefit of HRA if you are living in your spouse’s house.

Q. What to do if my employer is not allowing HRA benefits?

A. If your employer is not allowing the HRA benefits, still you can claim the HRA benefits at the time of filing your income tax return. Only you have to get the refund of excess tax deducted by your employer.

Q. Can both husband and wife claim the HRA benefits for the rent paid by them.

A. Yes, both husband and wife can claim the HRA benefits in the proportion they are paying the rent.

Q. Can I claim interest on home loan and HRA deduction together?

A. It depends on the circumstances. Suppose you own a house and you are paying interest on, but you are staying in a rented accommodation then it is possible to claim HRA and exemptions on the home loan interest together.

Q. Can maintenance charges paid, be claimed with HRA?

A. Maintenance charges cannot be claimed with HRA since it is not the income to the landlord.

Q. Can a person living in non-metro city, claim HRA deduction for metro city?

A. No. if a person living in non-metro city, cannot claim HRA deduction for metro city. In this case place of living is important for claiming HRA deduction.