Can both spouses claim HRA?

Yes, both spouses can claim HRA if they are paying rent. They can claim HRA benefits separately for their respective share of the rent payments.

IN UNIT LINKED INSURANCE PLANS, THE INVESTMENTS RISK IN THE INVESTMENT PORTFOLIO IS BORNE BY THE POLICYHOLDER.
IN UNIT LINKED INSURANCE PLANS, THE INVESTMENTS RISK IN THE INVESTMENT PORTFOLIO IS BORNE BY THE POLICYHOLDER.

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HRA exemption now!

Q: What should I do if I fail to submit my rent receipts to my employer?

If you have failed to submit your rent receipts to your employer, you can still claim HRA when filing your Income Tax Return (ITR).

Q: Can both HRA and home loan interest be claimed for tax benefits?

Yes, you can claim both HRA and the interest on a home loan as a deduction. However, you must meet certain conditions: You must be salaried and receiving HRA, living in rented accommodation in the same city where you work, and have taken a home loan for a property in your name or jointly owned with your spouse.

Q: What happens if I don’t receive HRA from my employer?

You can still claim a tax deduction under Section 80GG if you do not receive HRA, provided that your rent expenses exceed 10% of your total income, you have not received HRA during the year, and neither you nor your family owns a residential property where you currently live.

Q: Can I get a tax rebate if I am staying in my own house?

No, you cannot claim an HRA exemption if you are staying in your own house.

Q: My house is under construction & I have taken another accommodation on rent in the same city. Can I claim HRA?

Yes, you can claim HRA while your house is under construction and you are living in rented accommodation.

Q: Can I get both an HRA tax exemption and a tax rebate on my home loan?

Yes, you can claim both HRA exemption and a tax rebate on your home loan if you rent a house while paying a home loan on a property that is far away from your workplace.

HRA is an exemption, i.e. the part of your salary which is non-taxable provided you fulfil all conditions. Use our HRA calculator to understand how much tax you could save on your HRA.

HRA Exemption Calculator

Basic salary received (p.a)*

This is the amount paid to the employee without any additions or allowances

Dearness Allowance received*

Cost of living adjustment allowance paid to Government employees and pensioners. Please enter "0" if you do not receive dearness allowance.

HRA received (p.a)*

Component of the salary given by a company to its employee to meet house renting expenses

Total rent paid (p.a)*

Do you live in metros like Delhi, Mumbai, Kolkata or Chennai?*

Yes

No

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*Marked fields are mandatory

TAXABLE HRA

*The least of the below values is exempt from HRA

Actual HRA received
Rent Paid in excess of 10% of salary
40% of Basic Salary

Amount of exempted HRA
HRA chargeable to Tax

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What is HRA?

House Rent Allowance (HRA) is the allowance you receive from your employer towards the rent of your house. It forms a part of the salary paid to you by your employer.

HRA depends on multiple factors, such as your salary, city of residence, company’s salary structure, and more. Generally, HRA is a fixed percentage of your basic salary. You can claim a tax exemption on your HRA under Section 10(13A) and Rule 2A of the Income Tax Act, 1961.

How is Exemption on HRA calculated?

The exemption on HRA is calculated as per 2A of the Income Tax Rules. As per Rule 2A, the least of the following is exempted from salary under Section 10(13A) and does not form part of the taxable income.

Actual HRA received from the employer
For those living in metro cities: 50% of (Basic salary + Dearness allowance)
For those living in non-metro cities: 40% of (Basic salary + Dearness allowance)
Actual rent paid minus 10% of (Basic salary + Dearness allowance)

How is HRA taxed?

If the payment of rental expenses is more than ₹ 1,00,000/- annually, then it is mandatory for the employee to provide the PAN number of the landlord while filing income tax returns.

Let us understand the HRA component that would be exempt from income tax through an example

Mr X, employed in Mumbai, has taken up an accommodation on rent for which he pays a monthly rent of ₹ 25,000/-. He receives a Basic Salary of ₹ 45,000/- monthly along with DA of ₹ 7,000/- monthly which forms a part of the salary. He also receives HRA of ₹ 1 lakh from his employer during the year.

Sr No.	Particulars	Amount
1	Actual HRA received	₹ 1,00,000/-
2	50% of [(45,000+7,000)*12]	₹ 3,12,000/-
3	Actual rent ₹ 3,00,000 minus 10% of [(45,000+7,000)*12]	₹ 2,37,600/-
4	HRA deduction = Least of 1, 2, 3	₹ 1,00,000/-

Hence, ₹ 1,00,000/- would be exempt from salary under Section 10(13A).

Also, if the employee is paying rental expenses but does not receive HRA allowance as a part of salary from the employer or if the person is paying rental expenses but does not have salary income, the benefit of paying rental expenses can still be claimed under Section 80GG of the Income Tax Act, 1961.

HRA rules for self-employed individuals

Below are some HRA rules for self-employed individuals:

Self-employed individuals cannot generally claim HRA as this provision is valid only for salaried employees
Self-employed individuals can claim the tax deduction on HRA under Section 80GG of the Income Tax Act, 1961, if the rent paid is a business expense. However, they should not own residential property in the same location or receive HRA from an employer to claim the tax deduction
They can claim a tax deduction of ₹ 5,000 per month or 25% of the total income, whichever is lower under Section 80GG
Self-employed individuals must submit the rent agreement as proof to claim the tax deduction
The tax deduction can be claimed while filing the Income Tax Return (ITR)
Tax deductions for self-employed individuals under Section 80GG are subject to the prevailing tax laws and may change over time. It is recommended to consult a tax advisor for further details.

Documents Required for HRA Exemption Claim

Below is a list of documents required to claim HRA exemptions:

Copy of your PAN card
Copy of the landlord’s PAN card
Rent receipts for the concerned financial year
Copy of the rent agreement

Conditions for Claiming HRA Exemption

Below are the key conditions for claiming HRA tax exemption:

You must have paid rent to a landlord
Proof of payments made must be available if rent paid to family members, such as your parents
Rent receipts for the concerned financial year
Deductions can be claimed either under Section 10(13A) or Section 80GG, not both
As per Section 10(13A), the maximum HRA deduction can be up to the actual HRA component received from the employer

COMP/DOC/Jun/2023/16/3167

Frequently asked questions

Can I claim HRA if I pay rent to my family members?

Yes, you can claim HRA if you pay rent to a family member. However, the property must be owned by the family member. If you are the owner or if the property is co-owned, you cannot claim an exemption, as the rent would technically be paid to you.

What should I do if I fail to submit my rent receipts to my employer?

If you have failed to submit your rent receipt to your employer, you can still claim HRA when filing your Income Tax Return (ITR).

Can both HRA and home loan interest be claimed for tax benefits?

Yes, you can claim both HRA and the interest on home loan as a deduction. However, you must meet certain conditions, as listed below:

You must be a salaried individual receiving HRA as part of your salary compensation
You must reside in rented accommodation in the same city where you work
You must have taken a home loan for a property that is either solely in your name or jointly owned by your spouse

What happens if I don’t receive HRA from my employer?

You can still claim a tax deduction if you do not receive HRA from your employer. However, you must meet the following criteria:

You are either self-employed or salaried
Your rent expenses exceed 10% of your total income
You have not received HRA at any time during the year for which you are making a claim under Section 80GG
Neither you, your spouse, your minor child, nor your Hindu Undivided Family (HUF) owns any residential property where you currently live, work, or conduct a business or a profession

Can both the spouses claim HRA?

Yes, both the spouses can claim HRA if they are paying the rent. In such a case, both partners can claim HRA benefits separately for their respective share of the rent payments.

How does living in a metro city affect HRA exemption?

Living in a metro city allows you to claim a higher HRA exemption. The HRA exemption rules vary based on the city of residence. You can claim a 50% exemption in metro cities, whereas in non-metro cities, this percentage is capped at 40%.

Can I get a tax rebate if I am staying in my own house?

No, you cannot claim HRA Exemption in this case.

My house is under construction & I have taken another accommodation on rent in the same city?

Yes, you can claim HRA.

Can I get both an HRA tax exemption and a tax rebate on my home loan?

Yes, you can; where you have rented a house (for yourself) even though you have your own home, for which you are paying a home loan through EMIs. In this case, you have to prove that your house (for which you are paying a home loan) is far away from your workplace.

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DISCLAIMER:

Unlike traditional products, Unit Linked Insurance Products are subject to market risk, which affects the Net Asset Values & the customer shall be responsible for his/her decision. The names of the Company, Product names or Fund options do not indicate their quality or future guidance on returns. Funds do not offer guaranteed or assured returns.

Tax laws are subject to amendments made thereto from time to time. Please consult your tax advisor for details, before acting on the above.

^*Tax Benefit of 46,350/- is calculated at the highest tax slab rate of 30.90% on the premium of 1,50,000/- under Section 80C of the Income Tax Act, 1961.