House Rent Allowance: Eligibility, Benefits, Tax Implications, How to Calculate HRA Exemption and More Questions Answered Business
house rent allowance (HRA) is an essential part of the salary structure of employees. It is a part of the salary that is given to individuals and comes with specific tax benefits, Here are the main considerations and provisions regarding HRA and its implications from a tax perspective.
HRA eligibility
To be eligible for tax benefits on HRA an individual must be a salaried employee and live in a rented accommodation. Self-employed individuals cannot claim tax benefits on HRA.
HRA exemption calculator
The amount of HRA that is free from tax is determined on the basis of at least one of the following three factors:
HRA eligibility
To be eligible for tax benefits on HRA an individual must be a salaried employee and live in a rented accommodation. Self-employed individuals cannot claim tax benefits on HRA.
HRA exemption calculator
The amount of HRA that is free from tax is determined on the basis of at least one of the following three factors:
- Actual HRA received from employer
- Annual rent paid reduced by 10% of salary
- 50% of the employee’s basic pay (for employees in metro cities) or 40% of the basic pay (for non-metro cities).
rent payment proof
To avail tax exemption on HRA, employees must provide documentary evidence of rent payment, such as rent receipts or rental agreement, to their employers.
living in my own house
If an employee receiving HRA lives in his own house, he cannot claim exemption under it. income tax act, They will actually have to live in a rented house.
HRA exemption: Important points to note
- It is important to have a formal rental agreement between the landlord and the tenant, specifying details such as the amount of rent, period of tenancy and other terms and conditions.
- Tax benefits for HRA are available only if the individual has opted for the old tax regime.
With inputs from Center for Investment Education and Learning Content that appeared in The Economic Times
