Rent Receipt Generator
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House Rent Allowance (HRA) is paid by an employer to employees as a part of their salary to meet the accommodation expenses. Salaried individuals who live in rental premises can claim exemption of House Rent Allowance u/s. 10(13A).
Employees are required to submit the rent receipts to their employers to claim the tax benefit. The employers, in turn, will calculate exempt House Rent Allowance and deduct the same from the employee's taxable salary.
From FY 2020-21 onwards, House Rent Allowance Exemption is only available if an employee opts for the Old Tax Regime.
The amount of Exempt HRA will be the least of the following amounts:
- Actual House Rent Allowance received
- Actual rent paid less than 10% of salary
- 50% of salary if you live in a metro city/ 40% in case of a non-metro city (Here Salary includes - Basic Salary + Dearness Allowance)
The House Rent Allowance calculation formula has been explained below with the help of an example:
Let's understand with an example:
Raj works in a company in Ahmedabad. He lives in a rented flat. He pays INR. 15,000/month as rent. Following is his salary structure:
| Particulars | Amount (In INR) |
|---|---|
| Basic Salary | 5,00,000 |
| House Rent Allowance | 1,75,000 |
| LTA | 25,000 |
| Other Allowances | 12,500 |
| Gross Salary | 6,15,000 |
| Actual Rent Paid | 1,80,000 |
The least of the following will be the exempt House Rent Allowance:
- Actual House Rent Allowance = INR 1,75,000
- Actual Rent Paid (-) 10% of Basic Salary = INR 1,30,000 [1,80,000 - 10%(5,00,000)]
- 40% of the Basic Salary = INR 2,00,000 [40%(5,00,000)]
INR 1,30,000 will be exempt from the total House Rent Allowance received and the remaining INR 45,000 (1,75,000-1,30,000) will be taxable.
Yes, a taxpayer can claim both HRA and deduction on Home Loan for interest and principle component if the specified conditions are met:
- You live in rented accommodation while having a home on loan in a different city.
- You live in rented accommodation while having a home on loan in the same city due to work/ children's schooling (genuine conditions).
- You have acquired under-construction property on loan and hence live in a different accommodation.
Under Section 80GG, the deduction is allowed to an individual who pays rent without receiving any House Rent Allowance from an employer. Hence, check your Salary Slip to see if you are receiving any House Rent Allowance. If you do, you can't claim a deduction for rent paid under section 80GG. So you can claim a deduction from total income if you:
- Are paying House rent
- Don't receive any House Rent Allowance from your employer
- You or your spouse or minor children do not own residential accommodation at the place of employment
- Do not own self-occupied residential accommodation at any other place
If all these conditions are fulfilled, a deduction is available as the least of the following amounts:
- Rent paid less than 10% of the total income
- INR 5,000 per month i.e annually INR. 60,000
- 25% of the total income
(Here total income would be total income less all deductions under chapter VI-A except deduction u/s. 80GG)
The important point to keep in mind is in order to claim deduction u/s. 80GG, the assessee has to file Form 10BA prior to filing the ITR.