(1) A tax exemption on house rent allowance (HRA)
received is available under Section 10 (13A) of
the Income Tax Act to
individuals.
(2) It is a deduction available to a salaried
person who has an HRA component as part of his salary package and is staying in
a rented accommodation.
(3) The exemption for HRA deduction is the
minimum of
(i) Actual HRA received,
(ii) 50% of salary if living in metro else 40%
and
(iii) Excess of rent paid over 10% of salary.
(4) HRA exemptions are only available on
submission of rent receipts or the rent agreement with the house owner by the
tenant.
(5) The
rented premises must not be owned by the person claiming the tax exemption.
If you stay with your parents and pay rent to
them then you can claim that for tax deductions.
Courtesy: Centre for Investment Education and
Learning (CIEL).
Contributions by Girija Gadre, Arti Bhargava
& Labdhi Mehta.
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