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