House Rent Allowance or HRA—a critical piece of the salary—can be claimed by salaried people who live in rented houses to bring down their taxes. The reduction in taxes while claiming HRA can be partially or entirely. A piece of the HRA is excluded under section 10(13A) of the Income Tax Act, 1961. The employer reduces the exempted portion from the taxable salary while calculating income tax. For people who don’t live in rented accommodation, this allowance is completely taxable.
While filing ITR, employees are needed to give salary breakup to the office to show the HRA which he/she is receiving. The HRA is connected to the amount of salary, and consequently, it increases with rising salary.
How to Claim the House Rent Allowance (HRA)?
The HRA exemption which the taxpayer is eligible to receive is the least of the following amounts:
1. The actual HRA received
2. 50 percent of [basic salary + DA] for those living in metro cities (40 percent for non-metros)
3. Actual rent paid less than 10 percent of basic salary + DA
Taxpayers can avail of the HRA advantage on the submission of rent receipts, signed by the house proprietor, to the employer. Also, they will have to provide the Permanent Account Number (PAN) of the house proprietor if the rent paid during the year is more than Rs 1 lakh. After calculating the HRA exemption, citizens can claim it while filing ITR.
In the correct ITR Form, they are needed to enter the break-up of salary. The citizen will at that point need to enter the number of allowances that are not excluded. Under this, they are needed to enter the non-excluded part of HRA and add to some other recompenses they get which are not expense absolved.
Taxpayers will likewise need to declare the amount of HRA which they are claiming as an exemption. In ITR 1, taxpayers can tap on the fifth tab under ‘taxes paid and verification’ and enter the choice under ‘exempted income’. This contains the option for ‘HRA’ under the ‘others’ button. Taxpayers ought to enter an exempted portion of HRA under this heading.
For more information, visit the website of All India ITR