Sage-Tips

Can I claim that HRA exemption was paid in another state other than the place of my employment?

Can I claim HRA for rent paid in a location other than my place of employment? The Income Tax Act section pertaining to HRA does not specify any condition for the place for which the employee can claim the exemption.

Can I claim HRA while working from home?

HRA comes as a part of salary and can be availed by employees who are living in rented accommodations. However, in FY 2020-2021, a large number of salaried individuals, especially youngsters, stayed away from their rented accommodations and worked from home while living with their parents.

How do I claim HRA exemption while filing?

Once you know the HRA claim amount, use the right ITR form and file for your ITR by following these steps:

1. Enter your salary in ‘Salary as per provisions contained in section 17(1) ‘ in Form 16 – Part B.
2. Enter the HRA calculated above under ‘Allowances exempt u/s 10’ in the ITR 1 (select 10(13A) in the drop-down menu)

Can both spouses claim HRA?

Though HRA is included in the basic salary, it’s not fully taxable. You can claim tax deductions on it. To optimize the tax-benefits from the HRA exemption, you can split it with your spouse. If both the husband and wife are in the same tax slab, then the rent paid can be split 50:50 to enjoy higher tax savings.

How does HRA exemption work?

50\% of the employee salary is eligible for HRA tax exemption if he or she lives in any of the Metro cities of India. In case the employee lives in any other city then 40\% of the salary can be HRA exempted. The actual rent that is paid by the employee for the residence each month, minus 10 \% of his/her salary.

Can I claim HRA tax exemption if I live in rent?

You will have to be living in a rented accommodation to claim HRA tax exemption. The entire HRA paid to you cannot be claimed as an exemption. The lowest of annual rent actually paid minus 10\% of basic salary, HRA paid by the employer and 40\%/50\% of salary depending on where you stay can only be claimed.

Can an Indian employee claim HRA in two different countries?

So, even during normal times and in spite of the employer and employee being situated in two different countries, the Indian law will still allow the Indian employee to claim the HRA benefit, as long as he complies with the basic conditions of having paid the rent for the residential accommodation occupied by him and not owned by him.

What happens if my employer does not pay my HRA?

For self-employed individuals who do not receive an HRA component, HRA rules allow the benefit of claiming HRA exemption under Section 80GG of the ITA. This is the route that even salaried individuals paying rent can take in case their employer does not pay HRA.

What is the HRA deduction for self employed?

HRA exemption rules state that HRA deduction is only allowed for salaried and self-employed individuals who live in rented accommodation. This means that even if your salary structure has an HRA section or component if you are not paying rent, the entire amount will become taxable.