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Tag: House Rent Allowance (HRA)

  • Can hire allowance be claimed for a couple of property?

    I’m renting a home in Mumbai and my dad and mom reside in one other rented property. I’m paying the hire for each homes and have the settlement and hire receipts. Can home hire allowance (HRA) be claimed for a number of properties?

    —Name withheld on request

    HRA exemption is allowed underneath part 10(13A) of the Income Tax Act. Further, Rule 2A of the Act stipulates the situations to be glad to assert HRA exemption. One of the situations given in Rule 2A is: the allowance should be particularly granted to the worker by his employer to satisfy expenditure truly incurred on cost of hire in respect of residential lodging occupied by the assessee.

    Accordingly, the HRA exemption can be out there solely in respect of the rented residential lodging occupied by you and due to this fact it is possible for you to to assert HRA profit just for hire paid in respect of your residence and never for the lodging rented out to your dad and mom, even when the hire for that’s additionally being paid by you.

    The quantity of HRA you can declare is restricted to the bottom of the next: the precise HRA obtained out of your employer, 50% of your fundamental wage (40% in case you are dwelling in a metro metropolis) and extra of the particular hire paid over 10% of your fundamental wage.

    For instance, in case your fundamental wage is ₹50,000 per 30 days (50% of fundamental wage: ₹25,000), and also you obtain ₹20,000 per 30 days as HRA and also you pay ₹30,000 per 30 days as hire ( ₹25,000 over and above the ten% of your wage), then your HRA exemption can be ₹20,000 as it’s the lowest of the three quantities. For the monetary 12 months, this could work out to be ₹2.4 lakh

    Please word that the HRA exemption is a deduction out of your taxable earnings. This signifies that the decrease your taxable earnings, the decrease your earnings tax legal responsibility can be.

    It is necessary to notice that the earnings tax division might scrutinize your HRA declare in case you are claiming it for a number of properties. Therefore, you will need to preserve correct documentation and guarantee that you’re eligible to assert HRA for each properties.

    You might want to submit the next paperwork to your employer: hire agreements for each properties, hire receipts for each properties, declaration kind out of your employer stating that you haven’t claimed HRA for each properties concurrently.

    Amit Bhachawat is chief monetary officer of India Mortgage Guarantee Corporation

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    Updated: 27 Sep 2023, 10:25 PM IST

  • Switching to new tax regime? You can nonetheless declare deduction on dwelling mortgage curiosity

    Beginning this evaluation yr, taxpayers can have the choice to decide on between outdated and new tax regime for the aim of submitting their earnings tax return (ITR). The new tax construction, launched in Budget 2020, does away with 70 odd tax deductions and exemptions and lowers tax charges for annual incomes as much as ₹12.5 lakh.

    Despite the main deductions on investments beneath Section 80C, House Rent Allowance (HRA), customary deduction of ₹50,000 and medical insurance coverage premium, amongst others gone, not all is misplaced for taxpayers who’re mulling choosing the brand new tax regime.

    One such vital deduction obtainable is on curiosity paid on a house mortgage taken for a rented-out property. “The rule foregoes tax profit on a house mortgage on a self-occupied property. The tax guidelines nonetheless enable deduction on curiosity paid in the direction of mortgage on a rented property beneath part 24(b),” mentioned Karan Batra, founder, charteredclub.com.

    Another vital tax profit allowed beneath the brand new tax construction is deduction on employer’s contribution in National Pension Scheme (NPS) beneath part 80CCD (1B).

    Similarly, maturity proceeds and gathered curiosity from PPF and Sukanya Samriddhi Yojana (SSY) will proceed to be tax exempt. The new tax regime has solely foregone deduction profit on contributions made on these two funding choices.

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