Table of Contents
Can employee claim both HRA and RFA?
If the rent paid is equal to HRA, then both will be beneficial and one can choose between either RFA or HRA. But, if rent paid is lesser than HRA, then HRA wins over RFA. And, If rent paid is higher than HRA, then it is beneficial to claim rent free accommodation than HRA.
How much house rent is taxable?
An Illustration
| Condition | Tax Exemption |
|---|---|
| 1 | Rs 60, 000 (@Rs 5000 Per Month, according to the HRA exemption 2016-17 rules, earlier the limit was Rs 2, 000) |
| 2 | Rent paid i.e. 1.5 Lakhs – 10\% of the total annual income, i.e. Rs 40, 000= Rs 1, 10, 000 |
| 3 | 25\% of the total income= Rs 1 Lakh |
What is house rent reimbursement?
House Rent Allowance, or commonly known as HRA, is an amount which is paid by employers to employees as a part of their salaries. This is basically done as it helps provide employees with tax benefits towards the payment for accommodations every year.
What is not considered as salary for the calculation of RFA?
Salary includes all emoluments paid to an employee but excludes dearness allowance which is not included in the computation for retirement benefits, allowance which are exempt from tax, value of perquisites under section 17(2), employer’s contribution to PF and lump sum payments received on retirement.
Is RFA taxable?
Hence, in a simple way, RFA is a part of perquisites that are considered as additional benefits getting from your employer received in kind and it is taxable as per the provisions of Income Tax Act.
Where the accommodation of RFA is taken on lease or rent by the employer then treatment shall be?
Under the Income Tax Act, rent-free accommodation is treated as a perquisite or non-cash component of salary granted by the employer to an employee.
How to claim HRA tax exemptions on rent paid for house rent?
In case the rent paid towards house rent is more than Rs 1 Lakh, the individual can claim HRA tax exemptions towards it. He or she will have to furnish the PAN details of the property owner, along with the rent receipts.
Do I have to pay HRA if my rent is over 1 lakh?
Remember while submitting rent agreement or rent receipts to your employer, you are also required to submit PAN of your landlord if the annual rent exceeds Rs 1 lakh. “The taxable portion of HRA will be added to your salary as per provisions in section 17 (1) under the head ‘Gross Salary’.
Is the amount of HRA fully taxable in India?
The amount of HRA will be fully taxable if you stay in your own house or your relative’s. Yes, but only if you are residing in that house. It happens in Delhi where people are living in delhi and working in Noida or Gurgaon which is in other state.
What is the difference between HRA and house rent allowance?
HRA can be fixed or can be derived upon through a special agreement between the employee and the employer. As the name suggest, the House Rent Allowance is given to an employee when he or she lives in rented residential premises, and is only provided when the employee stays at a residence that he or she does not own. HRA for Self Employed