Sunday, December 3, 2017

Benefits of HRA The biggest benefit of the house rent allowance is that it provides for an avenue to reduce the taxable income , which in turn leads to a reduction in the tax that you have to pay.



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FAQ

Frequently asked questions about house rent allowance.
  1. Can anyone claim HRA?
    No, not everyone can claim HRA. House rent allowance is afforded to those who are living in rented accommodations. It is not applicable for self-employed individuals and those who live in their own houses.
  2. Can I claim HRA if I live in my own house?
    No. If you live in your own house you cannot claim HRA.
  3. Can I claim HRA and deduction on home loan interests?
    There may be a situation where you own a house but still choose to stay in a rented accommodation because it happens to be closer to your office or because your place of work is in another city. In such a situation you can claim house rent allowance and exemptions on the home loan interest at the same time.
  4. When do I have to provide the PAN information of my landlord?
    If the annual rent paid by you exceeds Rs. 100,000 in one financial year, the landlord’s PAN details need to be provided.
  5. Do I have to produce rent receipts while claiming HRA?
    If the rent paid every month is up to or less than Rs. 3,000 then rent receipts need not be provided. If the monthly rent does exceed Rs. 3,000 then rent receipts will be needed.
  6. I live in a house owned by my spouse and pay rent to my spouse. Can I claim HRA?
    Technically there is nothing illegal about paying rent to a spouse as long as they, the spouse, show it as an income and declares it. There must also be a record of this transactions because if the IT departments decides to take a closer look at your case and finds discrepancies, it might lead to trouble.
  7. . Is it possible to claim the HRA for two houses?
    No, the HRA benefits are available for only one house in the concerned city of the workplace.
  8. . What are the documents required for HRA exemption?
    In order to apply for HRA exemption, you will require producing the Rent Receipts. If your rent amount exceeds Rs.15,000 per month, then either the PAN card of the landlord or a written consent (stating the PAN is not available) from the landlord is required.
  9. . Is Dearness Allowance included in the HRA?
    The Dearness Allowance (DA) is the components that are associated with the retirement benefits. The HRA is a type of remuneration the employer offers to support your rental amount towards accommodation. Hence, the DA and HRA are two different components and not merged together.
  10. . Does HRA include maintenance charges?
    No, the HRA is paid towards rent only. You won't be able to claim the maintenance fee as HRA. The maintenance charges are not considered as the landlord's earnings to be calculated for his/her income tax.
  11. . Does HRA include electricity charges?
    No, you won't be able to claim the electricity charges as HRA. The electricity charges are not considered as the landlord's earning since it is paid to the electricity provider.
  12. . How to claim HRA without landlord's PAN card?
    If the annual rent exceeds Rs 1,00,000 per annum, it is mandatory for the employee to obtain the PAN card from the landlord. The PAN card will be required as a proof while submitting the HRA claim. If the landlord does not have a PAN, a declaration needs to be obtained that will include details such as landlord's name, address, the rent amount you are paying, and the period of accommodation.
  13. . Does HRA come under 80C?
    No, Section 10(13A) is for House Rent Allowance (HRA).
  14. . When is HRA is applicable?
    HRA is applicable for individual who stay in rented accommodation. It is a part of the salary that is given by the employer to support the employee's accommodation.

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