Employed people get House Rent Allowance. HRA is now an important part of the salary structure of almost all employees. This is an allowance, which the company gives to the employee to pay the house rent.
House Rent Allowance is one such tool, through which income tax can also be saved. HRA is exempt under section 10(13A) of the Income Tax Act, 1961 subject to certain conditions. The taxable income of a salaried person is calculated after deducting HRA. If an employee is living in his own house and does not pay rent for any house, then HRA is fully taxable.
The benefit of tax exemption in HRA is available only to salaried individuals. Along with this, it is also worth noting that the benefit of this exemption is available only to those who file income tax returns by choosing the old tax regime. Those opting for the new tax regime cannot avail tax deduction on HRA. It is also mandatory for HRA to be a part of the salary structure for tax exemption. People doing their own business do not get the benefit of this. HRA tax exemption depends on four factors. Salary (Basic Salary + DA), HRA component in salary, rent paid and location of rented accommodation.
How is HRA exemption calculated?
According to a report in India Today, Abhishek Soni, co-founder and CEO of Tax2win, says that a salaried person can avail HRA tax exemption on the amount he pays as house rent. Is. The calculation of HRA exemption depends on several factors. This exemption is given in the form of HRA, 50% of the salary (Basic Salary + DA) in metro cities and 40% for non-metro cities, paid more than 10% of the annual salary (Basic Salary + DA) Can be taken on the amount paid.
How to claim HRA exemption?
Sony says that to get HRA exemption, the employee has to submit the rent receipts and rent agreement to the employer. You need to submit Form 12BB to your employer to claim HRA exemption. This form contains the details of your paid rent, name of the landlord and PAN of the landlord. On paying rent above one lakh rupees annually, the employer has to give the PAN number of the landlord. An employee who lives in his parents’ house and pays rent is also entitled to HRA exemption.
