HRA exemption: Things to know while filing ITR

NEW DELHI: HRA or

house rent allowance

is one of the common things that is claimed by the salaried individuals for saving tax. HRA is a basic component of salary. However, most of us are not familiar with the rules that can help us save tax on it. If you are living on rent, then you can use HRA to reduce your tax liability.


Here are the key things to know about filing HRA:

* Valid

rent agreement

: The agreement must mention relevant details like duration of rent, amount, bills (electricity, water or others) being paid.

* Shared accommodation: This is common for those staying in groups or with friends. In this case, apart from providing the above details, it is also needed to mention the ratio in which the rent is divided along with the share in utility bills.
* Avoid cash: Consider paying your bills or rents via any digital platform instead of paying in cash as it keeps can help to maintain a record.

* PAN card: In case the amount of rent or other bills exceeds Rs 1 lakh, then a taxpayer must provide landlord's PAN (permanent account number) to the employer for claiming full HRA benefit. The landlord must give a declaration if he/she doesn't have a PAN card. But, it is advisable to avoid this sort of situation.


Taxability of HRA: Least/minimum of the following is exempt (not taxable/deducted from total HRA received)

* Actual amount of HRA received
* Excess rent paid annually over 10 percent of the annual salary
* 50 per cent of salary if house taken on rent is situated in Kolkata, Chennai, Mumbai and Delhi
* 40 per cent of salary if the house is taken on rent is not situated in Kolkata, Chennai, Mumbai and Delhi

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