Salaried individuals that live in a\nrented house are eligible for tax benefits on their housing allowance. HRA or\nhousing rent allowance is usually a component of an employee\u2019s gross salary and\ncan be used to lower taxes fully or partially under Section 10 (13A) of the\nITA. The HRA exemption is deducted before arriving at your taxable income.\nCertain employers provide compulsory HRA as part of the gross salary break-up.\nIf you live in your own house or live in a house where you do not pay rent,\nthen the HRA component is fully taxable.<\/p>\n\n\n\n
The HRA deduction amount is\ncalculated on the lesser of the following:<\/p>\n\n\n\n
For example, assume that your basic\nsalary in the city of Delhi is Rs 30,000 per month. Your employer provides you\nwith a monthly HRA of Rs 12,500 and no dearness allowance, which is usually the\ncase with most private companies. Now, 50% of your basic salary comes out to Rs\n15,000 which is more than your HRA amount. Will you get a tax benefit on Rs\n15,000? No, your HRA tax exemption will be applicable on the lesser of the two,\nwhich in this case is Rs 12,500 only.<\/p>\n\n\n\n
Additional Read<\/strong>:- All You Need To Know About Tax Benefits on Home Loans <\/a> <\/p>\n\n\n\n Before starting the procedure for\navailing HRA related tax rebate, make sure that your rent documents are in\nplace. You will need:<\/p>\n\n\n\n Once you have assimilated these\ndocuments, submit them with your company\u2019s human resources department promptly.\nAfter submission, the tax rebate amount will be credited to your account by\nyour employer. An employee can double-check the final rebate amount by\nreferring to Form 16, provided by the employer at the end of each financial\nyear. <\/p>\n\n\n\n In case you forget to submit your\nrent-related documents to your employer, fret not! You can also claim this tax\nbenefit when filing your annual income tax return (ITR) using ITR-1 form on the\ne-filing website. The portion of HRA which is tax-exempted will have to be\nmanually calculated and filled out by you, as part of your income tax refund.\nYou will have to claim a refund because your employer would have assumed that\nthe entire HRA component is taxable since you did not provide relevant\ndocuments proving otherwise. Use the simple formula given above to calculate\nthe HRA refund you are eligible to receive. Do not fill incorrect information\nas that will lead to a penalty.<\/p>\n\n\n\n Additional Read<\/strong>:- Buying a House? Make Sure to Follow this Home Buying Guide! <\/p>\n\n\n\n Renting out a place is not a long-term solution. Invest in housing finance and proudly own a home for you and your family. Apply for a home loan<\/a> today with Tata Capital<\/a>. We provide competitive home loan interest rates<\/a> that allow you to avail the home loan tax benefits. Log on to our website and use our home loan calculator. Our home loan EMI calculator<\/a> helps you figure out your home loan eligibility<\/a>. Tata capital\u2019s EMI calculator for home loan saves you time and is very reliable.<\/p>\n\n\n\nHow to claim tax benefit on HRA?<\/strong><\/h2>\n\n\n\n
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