How to claim HRA in income tax return?

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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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While filling out my first ITR, I learned that I could claim tax exemption through HRA. But I didn’t know how to claim HRA in ITR, so I called my cousin. My cousin has been working for quite a few years and she was aware of all the steps. Here is what she told me. 

How Can We Claim HRA in Tax Return?

She told me that to claim HRA, certain conditions need to be met and those are

• Live in rented accommodation

• Receive HRA as a part of your CTC.

• Submit valid rent receipts and proof of rent payments.

After this she told me the steps following which I could claim HRA in ITR. Here are the steps

• She told me to calculate the HRA exemption. 

• Followed by calculating my taxable salary by subtracting the exemptions and deductions from the gross salary.

• Then, she told me to use the relevant ITR form and file my income tax return. 

• After this, I was suggested to fill in the HRA details in the tax return form. 

• While filing, she told me to attach the necessary documents, such as the Rent agreement, rent receipts, and Form 12BB. 

And that is all that she told me about how to claim HRA in ITR. I hope this helps. 

For a salaried person who receives HRA as a part of the salary, it is important to know the tax implications. HRA is a house rent allowance provided by the employer as a part of the salary for employees to pay rent to the landlord for a rented accommodation. There is a provision to file for tax return on HRA. In this answer we will take a look at how to claim HRA in income tax return.

Before understanding the process on how to add HRA in income tax return, we must know how much HRA can be claimed in ITR. HRA exemption is the lowest of any of the following:

• The actual HRA;

• 50% of basic salary + Dearness Allowance (DA)

• Actual rent paid - 10% of basic salary plus DA

There are various conditions under which you can claim HRA exemption. Let us have a look at them.

1. When you submit rent receipts to your employer

2. When you don’t submit the rent receipts to your employer

If you have submitted the rent receipts or rent agreement to your employer, it will be prefilled in the Form 16. If you are filing ITR using ITR-1 then most likely the amount will be pre-filled as well, but you must verify it from Form 16 to avoid any discrepancy. 

In case ITR-1 does not carry pre-filled information, then you must add details like taxable portion of your HRA and tax exemption portion of HRA from Form 16

If you have not submitted your rent receipts or agreement copy then you will have to manually calculate the HRA tax exemption portion and fill it in. 

You will have to enter ‘Salary as per provisions contained in Section 17(1) in Form 16 Part B and enter tax exempted HRA in ‘Allowances exempt u/s 10' in the ITR 1. From the drop-down menu, select '10(13A) - Allowance to meet expenditure incurred on house rent’