Tax exemption on HRA in India
You can claim HRA exemption by filing Form 10BA which will contain the details of your rent payment. The amount you can claim as a self-employed person is the minimum value of the following: Rent paid more than 10% of the total Income. 25% of the total Income.
How much HRA is exempt from tax in India?
50% of the employee salary is eligible for HRA tax exemption if he or she lives in any of the Metro cities of India. The metropolitan cities of India include Delhi, Mumbai, Calcutta and Chennai. In case the employee lives in any other city then 40% of the salary can be HRA exempted.
Is HRA exemption available for AY 2020 21?
No, as per Income Tax Act a person is required to submit his return of income, if income exceeds exemption limit. Exemption limit for the assessment year 2020-21 & 2021-22 is Rs. 2, 50,000.
How is HRA exemption calculated 2020?
Your exemption will be based on the least of the below mentioned options: The actual amount allotted by the employer as the HRA. Actual rent paid less 10% of the basic salary. 50% of the basic salary, if the employee is staying in a metro city (40% for a non-metro city).
Under which section HRA is exempted?
HRA for salaried people is accounted for under section 10 (13A) of the Income Tax Act in accordance with rule 2A of Income Tax rules. Similarly, self-employed individuals are not considered for HRA exemption under this section but can claim tax benefits under section 80GG of Income Tax Act.
Is HRA fully exempted from income tax?
The amount of HRA exemption is deductible from the total income before arriving at a gross taxable income. This helps an employee to save tax. But do keep in mind that the HRA received from your employer, is fully taxable if an employee is living in his own house or if he does not pay any rent.
How do I claim full HRA exemption?
You can now easily claim HRA by attesting a copy of Form-16 with your ITR-1. However, if you prefer to do it the other way, you can also submit the rent-related documents such as rent agreement or receipts in order to claim HRA when filing your return.
What is the rule of HRA tax deduction?
Tax benefit for House Rent Allowance is available under the Income Tax Act, 1961. HRA exemption will be the rent paid minus 10% of the basic salary or 50% of basic salary for a metro city employee and 40% of basic salary for non-metro city or total amount received as HRA; whichever is lower of the three.
How much rent income is tax free?
How Much Rent is Tax Free? A person will not pay tax on rental income if Gross Annual Value (GAV) of a property is below Rs 2.5 lakh.
What is the maximum HRA exemption limit?
Therefore, you will get Rs 1.32 lakh exemption from income tax. You can claim HRA exemptions by submitting your monthly rent receipts. However, keep in mind that it is mandatory to report the PAN card details of your property owner if you pay more than Rs 1 lakh annually.
How is HRA exemption calculated ay 2021 22?
The exemption for HRA benefit is the minimum of:
The total amount of HRA received. 50 percent of salary (Basic salary + Dearness Allowance) if living in metro cities or 40 percent for non-metro cities. Excess of rent paid annually over 10% of annual salary (Basic salary + DA)
How much HRA can I claim without receipts?
Rs 3,000 per month
Yes, if your HRA is up to Rs 3,000 per month, you can claim HRA without rent receipts. But, you can not claim HRA without rent receipts when your HRA exceeds Rs 3,000.
Is HRA part of 80C?
Is HRA part of 80C? No. HRA exemptions can be claimed under Section 10(13A) or Section 80GG.
Can I claim HRA if I own a house?
One can claim HRA exemption as well as the deduction for interest on a home loan if one owns a house but lives in a rented house. Both these tax deductions are allowed only if the house one owns and the house one lives in are at different locations and there is a genuine reason for not living in one’s own house.
Is rent receipt mandatory for HRA exemption?
You must ask for receipt for the rent paid every month irrespective of the channel used for making payments. Pinky Khanna, Director, People Advisory Services, EY India says, “It is mandatory to furnish rent receipts to the employer for claiming HRA exemption for the monthly rent paid more than Rs. 3000 per month. ” 5.