In Mumbai, Sachin Patel resides in a rental home. His folks are tenants in yet another Ahmedabad home. He is covering the cost of both homes’ rent. He possesses the leases and rent invoices for both residences. Their concern is whether House Rent Allowance (HRA) can be claimed in this circumstance on the rent of more than one home. It’s possible that your inquiry is comparable to Sacheen’s. If so, this information will be helpful to you.
The employer provides a special allowance
According to Section 10(13A) of the Income Tax Act, HRA exemption is possible. Additionally, the Income Tax Act’s Rule 2A specifies the requirements that must be met in order to claim the House Rent Allowance exemption. One of the requirements outlined in Rule 2A is that the allowance must be directly granted to the employee by his employer to cover the cost of paying rent for a residential property that the taxpayer actually occupies.
The HRA exemption will be available for residential property
The HRA exemption will only be available for the residential property you have rented. In this case, you can only submit an HRA claim based on the amount of rent that was paid for your home. You won’t be able to use House Rent Allowance for your parent’s home, even if you pay rent for it. The total HRA you can claim is likewise subject to a cap. You may only claim up to 50% of your base wage under this.
Think of it this way
Say your monthly basic salary is Rs. 50,000 and you receive an HRA of Rs. 20,000. But your monthly rent is Rs 30,000. Therefore, for each financial year, your House Rent Allowance exemption will be limited to Rs 20,000 per month and Rs 2.4 lakh annually. You must keep in mind that the HRA exemption is a deduction from your taxable income in this instance. In other words, your tax obligation will be smaller the lower your taxable income.
HRA Exemption – The Income Tax Department has the right
to examine your claim if you are claiming HRA for multiple properties. In order to claim HRA, follow the rules. It is crucial to keep accurate records and confirm that you are qualified to submit HRA claims for both residences. You should provide your employer with the rental agreements for both properties, the rent receipts for both properties and a statement from your employer confirming that you have not simultaneously claimed HRA for both properties.
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