How to claim home loan interest in income tax return?

Wondering

how to claim HRA while filing ITR.

House Rent Allowance (HRA) is a key component of a salary package for many salaried individuals in India. It provides tax benefits for those who live in rented accommodations. 

How to File Income Tax Return for HRA?

Here's a step-by-step guide on how to file HRA in ITR:

To claim HRA exemption, you must:

1. Receive HRA as part of your salary.

2. Pay rent for residential accommodation.

3. Not owning a residential property at the place of employment.

The HRA exemption is the minimum of the following three amounts:

1. Actual HRA received.

2. 50% of salary (basic salary + dearness allowance) if living in a metro city (Delhi, Mumbai, Kolkata, Chennai); 40% of salary for non-metro cities.

3. Rent paid minus 10% of salary.

For instance, if your salary (basic + DA) is Rs. 50,000 per month, the actual rent paid is Rs. 15,000 per month, and HRA received is Rs. 10,000 per month, the calculation would be as follows:

1. 50% of salary (for metro) = Rs. 25,000

2. Rent paid minus 10% of salary = Rs. 15,000 - Rs. 5,000 = Rs. 10,000

3. Actual HRA received = Rs. 10,000

• In this case, the exempted HRA would be the least of these amounts, i.e., Rs. 10,000 per month.

• If your annual rent exceeds Rs. 1 lakh, you need to provide the landlord's PAN. If the landlord does not have a PAN, a declaration must be submitted. Keep a copy of the rental agreement, although it's not mandatory to submit while filing the return.

• Ensure that your employer has provided the HRA component in Form 16.

• While filing your Income Tax Return (ITR), declare the HRA under the 'Income from Salary' section. The HRA exemption will be calculated automatically based on the details provided.

• Self-employed individuals cannot claim HRA but can claim rent expenses under Section 80GG, subject to conditions.

• Claiming HRA can significantly reduce your taxable income. Ensure you maintain accurate records of rent payments and other relevant documents. If you have complex tax situations, consult a tax professional for guidance.

This is all about

how to claim HRA while filing ITR.

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How to Claim HRA If Not Mentioned in Form 16 2024

If you have purchased a house and secured a home loan, you will be able to claim home loan interest in income tax. Interest on housing loan deduction for ay 2020-21 section 24 can be claimed up to Rs 2,00,000. Let us understand how to claim home loan interest in income tax return. According to section 80EEA loans taken up to 31st March 2022, will get deduced for interest on home loans.

How to claim home loan interest in ITR?

The documents required to claim home loan interest includes

• Ownership details of the property: You need to submit the details providing evidence that you are the property owner to claim the deduction. In case you are a co-owner you need to figure out your share. The deduction will depend on the share of your property.
• Date of completing the construction of property: To claim the deduction, the construction of the house should be completed within 5 years of purchasing the property. You can claim the pre-construction interest before 5 years of completion. For this, you can claim pre-construction interest in 5 equal instalments.
• Details of the borrower: You should also provide a home loan statement if you have secured home loans from the bank. If you are a co-owner, you also need to provide the home loan statement. The bank statement or certificate should have details about the principal amount and interest.
• Municipal taxes: After you purchase the property you need to pay municipal taxes.

You need to submit all the documents to the employer and you should also ask your employer to adjust the TDS as well. In case you are a freelancer or self-employed person you do not need to submit these details. You should calculate the income tax after you have these documents in place. The house cannot be sold within 5 years of possessing it. If you sell the house, you need to return the amount you have claimed to the income tax department. I hope you now understand interest on housing loan deduction for AY 2020-21 section 24 works. If you need assistance in calculating the loan installment (EMI) towards your housing loan, then you can use this Home Loan EMI Calculator:

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Read more: what is the exemption limit for housing loan principal? Is Stamp Duty Tax Deductible? Is Home Equity Loan Interest Tax Deductible For Rental Property?