Tips For Claim Tax Exemption In Various Renting Scenarios

Claim Tax Exemption: Salaried people who reside in leased housing can use the House Rent Allowance (HRA) deduction to decrease their tax obligation entirely or partially. Here are the top three circumstances that people confront while requesting HRA exemption.


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HRA, or House Rent Allowance, is a component of an employee’s wage package. HRA, on the other hand, is not totally taxed, unlike your base income. A portion of it is free from taxation under Section 10 (13 A) of the Income Tax Act of 1961, subject to certain conditions. To qualify for the HRA exemption, you must submit your rent receipts to your employer. Mentioning the owner’s PAN number is required if your rent exceeds Rs 1 lakh per annually, i.e. Rs 8,333 per month.

While it may be simple for some to reap the full benefits of HRA exemption, this may not be the case for others, particularly those who have migrated throughout the year. One such subject that many of us are perplexed about is whether or not to collect the landlord’s PAN.


The following are three major scenarios and how to cope with each one while seeking HRA tax exemption.

Case I:


Claim Tax Exemption: When the monthly rent exceeds Rs 8,333 but the yearly rent does not exceed Rs 1 lakh.

This type of uncertainty is more likely to arise if you have just moved from self-owned to rented property. Assume you are staying in a city with your family. However, in the midst of the fiscal year, you were required to leave the property and live in leased housing with a monthly fee of more than Rs 8,333. In this scenario, you do not need to provide the landlord’s PAN number in order to benefit from HRA. According to the Central Board of Direct Taxes (CBDT), mentioning PAN is only required when the annual rent exceeds Rs. 1 lakh, in any case.


Case II:

Claim Tax Exemption: When you share rented space with a buddy or friends.

If you are sharing a home with a friend, it is a good idea to have a copy of the lease agreement that clearly states the names of all lessees and the amount of rent paid by each of them. Alternatively, you might get a landlord statement outlining your monthly contribution in the form of rents. You should also bring a copy of the rent receipts with you just in case. Furthermore, in such instances, it is preferable to pay the rent by check or net banking. This is evidence of your monthly rent payments.

“Every salaried employee is allowed to claim HRA exemption under Section 10 (13 A) of the Income Tax Act, providing his/her name is specified in the rent agreement,” The deduction can be claimed for the lesser of real rent paid less 10% of the basic wage, or 40% of the basic salary in a non-metro city, or actual HRA received.”


Case III:

You have changed your address twice or three times in a fiscal year.

In this instance, the employee must get monthly rent receipts rather than collecting them all at once at the conclusion of the fiscal year. If the total of your monthly payments is less than Rs 1 lakh, you do not need to get the owner’s PAN. For example, if you paid Rs 8,000 per month for six months, then moved to a different place and paid Rs 7,000 per month for another six months, your yearly payment would be Rs 90,000 (48,000+42,000). Because the annual payment is less than Rs 1 lakh, the landlord’s PAN number is not required. However, if the payment surpassed Rs 1 lakh, the PAN details of both owners would have to be shown. To retain a record of your payments. It is advised that you pay the rent by check or net-banking, like in the instance above.


Claim Tax Exemption: Claiming HRA and home loan perks

According to the law, one can have more than two residences in his occupation, even if they are not entirely owned by him, and collect HRA and home loan advantages. For example, if you own a property in Bangalore but live in Delhi on a monthly basis for work. You may take advantage of both home loan perks and the HRA. Neither Section 80C 24 (b) nor Section 10 (13A) (which deals with tax advantages related to HRAs and house loans) have restrictions that prevent you from claiming either the HRA or the home loan exemption, or both. According to the modifications suggested in the Finance Bill 2019, you can have both.

HRA deductions can considerably help employees save taxes. However, in any event, in order to claim HRA, you must present proof of rent payment to your employer. As a result, if necessary, you can also request a formal rent receipt from your landlord.



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