Of all the tax benefits, HRA exemption is the most popular. Here are a few must know things about claiming HRA.
- Submit rent receipts
If you are claiming HRA through your employer, they’ll need a proof of rent payment to allow you exemption. The income tax act has made it the employer’s responsibility to collect rent receipts. On the basis of rent receipts submitted by you, your final tax liability shall be calculated and TDS adjusted accordingly.
- Landlord’s PAN details
If the annual rent paid by you is more than Rs 1,00,000, it is compulsory to get PAN of the landlord and report it to your employer. In case due to some reasons the landlord does not provide you the PAN or does not have one, you can ask for a declaration to this effect from the landlord with name and address of the landlord. And submit to employer and keep a copy safely in your records.
- HRA can be claimed directly in your tax return
If you have not been able to submit rent receipts to your employer, do not worry. HRA exemption can be directly claimed in your tax return. Calculate your HRA exemption and reduce the exempt portion from your total taxable salary. The net amount has to be shown under the head income from salary in your tax return.
- It may be possible to claim both HRA and home loan deduction
Under certain conditions you may be allowed to claim HRA as well as interest on home loan deduction. For example, you work in one city and live on rent but your family resides in another city and you buy a home where your family is. You can’t live in your own house since it’s far from your workplace and you take a house on rent closer to your office. There may be another situation applicable to you. In the above cases you may be allowed to claim HRA for the house on rent and also claim home loan deduction.
This article is by ClearTax (www.cleartax.in), India’s largest tax filing website where Individuals and Businesses can e-File their I-T Returns