Who doesn’t want to save income tax? Some people rely on their rent, while others depend on their mortgages. His parents’ home is occupied by someone. Before March 31, everyone is anxious to find tax savings. The laws governing HRA under the Income Tax Act will be discussed today, along with how to fully take advantage of it.
House Rent Allowance is referred to as HRA.
That is the compensation that the employer pays the employee for housing expenses. HRA is provided to all employees, whether public or private. It solely pertains to your CTC. However, this HRA is tax-exempt, which is to the employees’ advantage. In accordance with section 10 (13A) of the Income Tax Code, HRA is exempt. Only the basic pay and dearness allowance (DA) is added to the wage if HRA is to be claimed.
When the rent exceeds one lakh, then.
if you rent an apartment and pay an annual rent of one lakh rupees. In this case, you can submit the rent receipt to save income tax of up to Rs 1 lakh. You must also submit the rental agreement to the tax authorities in addition to this. The amount of rent will be added to the landlord’s income if their PAN card is also provided. There will then be a tax on that as well.
What happens if you have a mortgage loan?
To acquire their ideal home, people take out mortgage loans. For home loans, a principal payment exemption of up to Rs. 1.5 lakh can be claimed under Section 80C of the Income Tax Code. You receive an additional tax exemption of up to Rs 2 lakh on the interest you pay on your house loan under Section 24B as well. Thus, you are eligible for a tax exemption of up to Rs. 3.5 lakh. Separate tax exemptions will be provided for joint home loans. You must submit the necessary documentation for this.
How to obtain a tax break for living with parents
Even if you live with your parents, you can save money on taxes by paying rent on time each month. However, the requirement is that you must actually pay the rent and report it to the Income Tax Department. The PAN number of the parents must also be entered on the form if the rent exceeds Rs 1 lakh annually in order to qualify for the income tax exemption. Additionally, a copy of the lease agreement must be included. The parent’s income will thereafter be increased by the rental payment. If they only have rent as their only source of income.
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