Exemption Rules & Tax Deductions

     Exemption Rules & Tax Deductions-House Rent Allowance

Discounted people living in a rented house can claim House Rental Allowance (HRA) to cut taxes. This may be partially or completely exempt from taxes. The reimbursement is for expenses related to the rented apartment. If you do not live in a rented apartment, this allowance is fully taxable.

How is the Tax Exemption From HRA Calculated?

 

The available deduction is at least the following:

  • Current HRA received;
  • 50% of [basic salary + YES] for those living in metro cities (40% for non-metro); or
  • The actual rental pay less than 10% of the base salary + YES

 Can I ask HRA and refusal of interest for a home loan?

Yes, you can claim compensation because it has no impact on your home loan refusal. Both can be argued.

Try our free HRA calculator to determine your HRA off. This calculator shows you which part of your HRA you need to pay taxes – for example, how much of your HRA is taxable and how tax-free.

When do you need a PAN owner?

If you have rented a house and you pay more than £ 100,000 per year – remember to get the owner’s trail or you may lose the HRA exemption. Landlords without a PAN must be prepared to give you a statement regarding circular number 8/2013 of 10 October 2013.

Tenants who pay for the renting of renters to the NRI must remember to seize the TDS of 30% before making a lease payment.

What if my Employer Doesn’t Provide me With HRA?

If you pay for rent for any furnished or non-occupied dwelling occupied by you, but you do not receive an HRA from your employer, you can still request a refusal and it will be under Section 80GG.

Conditions that must be met to request this deduction:

  • You are self-employed or paid
  • You have not received an HRA at any time during the year for which you are looking for 80GG

You or your spouse or your minor child or HUF whose member is – do not have accommodation facilities at the place where you currently live, you perform duties, jobs or do a business or profession.

Illustration

We can better understand the HRA calculation with the following example:

Mr. A, an employee of New Delhi, occupies a rental accommodation for which he pays a monthly rent of 15,000 rubles during the Financial Year (FY) 2017-18, that is, the year of assessment (AY) 2018-19 .. He receives a Basic Salary to Rs 25,000 per month together with the YES of the RS. 2000, which is part of the salary. He also receives an HRA of 100,000 RS from his employer throughout the year. Let us understand the HRA component that would be exempt from income tax during FY 2017-18.

Sl No Particulars Amount (in Rs) Amount (in Rs.)
1 Actual HRA received 1,00,000
2 Rent paid (15000 p.m. * 12 months)
minus(-)
10% of {(250 00p.m.*12) + (2000p.m.*12)} i.e.10% of Basic + DA
1,80,000 1,47,600
32,400
3 50% of {(25000p.m.*12) + (2000p.m.*12)}(50% is considered as the accomodation is in Delhi) 1,62,000
4 Exempt HRA = lowest of 1,2,& 3 1,00,000

Therefore, in the above example, the entire HRA received from the employer is exempt from income tax.

How to Claim HRA When Living With Parents?

Let’s understand this with an illustration. Samiksha works at a MNC in Bangalore. His company provides him with a housing allowance. But she does not live in rented accommodation, but with her parents. How can she use this allowance? Samiksha can pay the rent to her parents and claim the allowance. All she has to do is make a lease with her parents and transfer money to them every month.

This way Samiksha can make a kind gesture and give back to her parents, and two, save some taxes. But remember: Samiksha’s parents will have to show the rent she paid on their tax returns. But as a family, you will save.

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Certicom Consulting [ Kedia Arpana & Co ] is a group of Chartered Accountants in the business of Small Business Setup & Statutory Compliance including for Professionals for the past 15 years. We have been an established and popular company with an excellent track record for the best customer satisfaction.

Certicom Consulting

Certicom Consulting [ Kedia Arpana & Co ] is a group of Chartered Accountants in the business of Small Business Setup & Statutory Compliance including for Professionals for the past 15 years. We have been an established and popular company with an excellent track record for the best customer satisfaction.