Are you a salaried person and want to claim your HRA in the current year? Here is a complete guide to applying for House Rent Allowance. But if you are a non-salaried person or your salary structure doesn’t have an HRA exemption, this exemption can also benefit you.
If you are here, then you must already know about the tax benefits on rented commodities. It is the expenses that are given to the employee living in a rented house by his/her employer. Many people are unaware of the benefits of tax exemption from these expenses. Read on for a complete guide to claiming the HRA in current years.
What Is The House Rent Allowance?
According to the Income Tax Act of 1961, section 10(13 A), along with the rule to 2A, a grant exemption of any house rent received by the employee from their employer subject to certain basic conditions.
Sounds complicated? Let me explain in very simple words. HRA, or the house rent allowance, is a part of the salary given by the employer to their employees. It includes all the expenses incurred towards rented accommodation like house rent. So, you can claim the HRA exemption only if you are living in a rented house. You have to show your rent receipt or rent agreement papers to HR to take the benefits of the House Rent Allowance.
What Is The Importance Of House Rent Receipts/Slips?
The rent receipt is documentary proof of the transaction happening between the landlord and the tenant. So, you must submit your rent agreement document to the employer to claim the house rent allowance. Keep in mind that you will get tax benefits only if you pay rent of more than Rs. 3000 in a month.
But what if you own a house but live in another city on rent due to work? In this condition, you can claim the tax benefits against the principal amount of your salary, and this is also beneficial if you have a home loan.
Documents Required To File HRA Online
The house rent receipt and the rent agreement are the most crucial papers you need to submit while claiming the HRA exemption benefits. If your annual rent is more than 1 lakh, the PAN number of the landlord is also required.
If your landlord doesn’t have his/her PAN card, you are allowed tax exemption when your rent is less than 1 lakh. According to circular No. 8/2013, dated October 10, 2013, your landlord must sign a self-declaration form stating he/she doesn’t have a PAN card. Else it is a mandatory document to submit; otherwise, you will not get any tax deductions. The tenants paying NRI landlords need to deduct TDS of 30% before making the payment of the rent.
So, these are the papers you need to avail of when filling out HRA online or even in offline condition. This will help you get an exemption in form-16 and avoid future problems when filing income tax returns.
What If You Don’t Receive Any HRA From Your Employer?
HRA is a part of the salary, but in some cases, it may not be included in your salary structure. Some non-salaried individuals might be living in other cities in rental houses. In this condition, section 80 (GG) of the income tax act offers help to claim the tax exemption on rent. But it includes some conditions that you need to fulfil to get eligible for tax deduction benefits.
- If you have a house in the city, you will not be able to claim the deduction.
- If you have your own house and living in another city, you can claim for HRA.
- There should be no house in the name of a Hindu Undivided Family (HUF), minor child, or spouse running his/her business in the city.
So, these are the requirement if you don’t have any rent-related allowance in your salary or you are self-employed. Check these conditions before claiming any tax exemption from your employer to avoid any embarrassment.
Requirements While Filing HRA Online In Your Tax Return
You need to mention the salary amount in the declaration form provided by your employer at the start of the financial year to claim the exemption. If you are unable to claim through your employer, you can apply it through ITR-form online, filling out your tax returns.
The tax department has now synced the ITR-1 with the form-16 to make the HRA exemption easier. Form-16 includes all the details of TDS (Tax Deduction on Sources) charged by the employer, along with HRA and other details. You need to submit this TDS certificate at the time of Income-tax return filling for tax benefits.
If you don’t find any TDS documents from your employer, you can also submit rent-related documents like rent receipts and rent agreements while filing tax returns online. But people usually don’t have these documents in hand, which may create some issues. If you don’t have one, do not worry; you can still claim your House Rent Allowance benefits by manually submitting the rental amount in IT returns.
So, this is the complete guide on House Rent Allowance that you need to keep in mind while claiming in the current year. If you find any difficulty filing HRA online, you can consult a financial expert to help you out.
A salaried person can get help from their HR or the employer and get all the documents required in income tax return filing. If you are self-employed or running your own business in other cities, consult experts for your HR Allowance benefits. Visit Piramal Finance to learn more about the HRA and its benefits. There are many articles and blogs that will help you improve your finance skills.