[ecis2016.org] Get the answers to the most frequently asked questions on HRA or House Rent Allowance.
HRA stands for House Rent Allowance. The employer provides a portion of your salary to cover the costs incurred towards rented accommodations. If you reside in a rented house, you can claim an HRA exemption. The HRA exemption is covered under Section 10(13A) and Rule 2A of the Income Tax Act, 1961.
You are reading: Frequently asked questions about HRA
What is the purpose of getting a rental receipt from my employer?
To qualify for an HRA exemption, your employer needs proof of rent receipts. You must provide proof to your employer before you can claim exemptions and deductions. According to the Internal Revenue Code, your employer must provide this proof.
Can I claim HRA if I live in my own house?
No. If your own the house, you will not be able to claim HRA.
Does my company require proof (rent receipts) by a certain date?
Employers usually provide a deadline by which all tax proofs must be submitted, since they must deduct and deposit TDS timely. You can avoid extra TDS being deducted from your income by filing your rent receipts and other proofs on time. However, if you miss the deadline, do not worry. HRA exemption can be claimed directly on your income tax return.
Can I submit rent receipt proofs if my company asks for them?
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The employer must collect proof of rent payment before allowing you to claim the exemption on HRA. Based on these rent receipts, the employer will exempt you from HRA. This will determine your tax liability. You will not be required to pay tax on HRA because your TDS will be adjusted.
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Do I need a receipt for every month?
Generally, employers need receipts for three months or so.
Is it necessary to have a lease agreement with my landlord?
Yes, your landlord needs to sign a lease agreement with you. The lease agreement must contain information about the accommodation on the lease, the lease period, and the rent. Your employer may also require a copy of this document.
Is my landlord’s PAN number required?
Consider the case where your annual rent exceeds Rs 1,000,000. The landlord must have a PAN and it must be reported to the employer for HRA exemption in that case. If the landlord does not have a PAN proof, you can request a declaration from the landlord to this effect. Make sure you keep this document safe.
I am not receiving a rent receipt from my landlord. What should I do?
You may not be able to claim the HRA exemption if you do not receive a rent receipt. Before renting the accommodation, agree on the rent receipts (following the correct rent receipt format) with your landlord.
Do I need a scanned copy of my landlord’s PAN card?
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No, you do not need to keep a scanned copy of your landlord’s PAN.
My company did not allow me to claim HRA. Can I do so on my own?
When filing tax returns, you can directly claim HRA exemptions. The HRA exempt portion can be determined using a calculator. The exempt amount must be deducted from your taxable salary. Your income tax return shows the net amount as your ‘income from salary’. If you claim HRA exemption directly in your tax return, you must keep rent receipts and lease agreements safely in case the assessing officer asks for them later.
I was living in a rented apartment for part of the year. Can I claim HRA?
Yes, you can still claim the HRA exemption for the months you were paying rent.
Are soft copies of rent receipts acceptable or do I need hard copies?
You should check with your employer about the format in which you need to submit.
A new job has been offered to me this year. Will the new employer need to see my old rent receipts?
Your old rent receipts may be needed if your current employer allows HRA exemptions based on your previous income. Remember to tell your current employer your salary from your previous employment on Form 12B.
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