Income tax exemption for HRA

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vrajasekhar1 asked 9 years ago

Hi Sreekanth, I worked for first 3 months in the last financial year(Mar-Jun'16) and quit my job. I earned certain amount as HRA for 3 months and no HRA/Salary for the reminder of the year. However, I paid house rent for 12 months. Can you please help me how the tax calculation will be for HRA exemption? 1) Do I get tax exemption on HRA considering the rent I paid for the entire year or just the rent I paid for 3 months? If I consider the rent I paid for 12 months, the actual HRA for 3 months is the min of all. So, the entire HRA amount that I received for 3 months should be tax exempted. Is that so? 2) Form16 shared by my employer does not indicate HRA exemption. Can I still deduct this amount while filing Tax returns? If so, (B1) Income from Salary will be different from what Form16 indicates. Is that fine? Does Govt need a proof of rent paid for 12 months to process my Tax returns? If reqd, how to submit the proof? Thanks, Rajasekhar.

1 Answers

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Sreekanth Staff answered 9 years ago

Dear Rajasekhar, 1 - A deduction from such HRA is allowed under section 10(13A), which is least of the following: –

HRA received
40% of salary (50% of the salary if the rented property is in Metro City i.e. Mumbai, Delhi, Chennai or Kolkata)
Actual rent paid less 10% of salary

Here, actual rent paid has to be considered for 3 months only and Salary is taken only for the period for which House Rent Allowance is received. 2 - Yes, you can claim HRA (if unaccounted) while filing your Income Tax Return. Actually, if an individual is self-employed (not received HRA) but paid rent then he/she can claim it u/s 80GG. But for that, one should not have any received HRA at any time during the Financial year. The Tax Deduction amount under 80GG is Rs 60,000 per annum. Section 80GG is applicable for all those individuals who do not own a residential house & do not receive HRA (House Rent Allowance). The extent of tax deduction will be limited to the least amount of the following;

Rent paid minus 10 percent the adjusted total income.
Rs 5,000 per month.
25 % of the total income.

vrajasekhar1 replied 9 years ago

Thanks, Sreekanth. That clarifies.