House rent allowance: Self-employed and salaried individuals who do not receive an HRA can claim an exemption for the rent under Section 80GG of the Income Tax Act.
Employers pay a part of the salary to employees as a house rent allowance (HRA) to compensate for the expenses incurred towards rented accommodation either fully or partially. A crucial part of a person’s salary, HRA can be claimed both by a salaried and non-salaried person to claim income tax benefits. HRA for salaried individuals is accounted for under section 10 (13A) of the Income Tax Act. However, there are several other conditions under which HRA can still be claimed.
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Rent exemption without HRA
Self-employed and salaried individuals who do not receive an HRA can claim an exemption for the rent under Section 80GG of the Income Tax Act. This is also applicable in cases where small enterprises don’t have a very structured salary.
However, there’s a limit to making a claim under this. The limit is Rs 5,000 per month or Rs 60,000 per annum or 25 per cent of the total income. Also, one can claim actual rent paid minus 10 per cent of the income.
Requirement of landlord’s PAN number
Those who are paying more than Rs 1 lakh as rent annually have to submit the PAN card of the landlord. In case your landlord does not have a PAN, the employee will have to submit a declaration to that effect.
You can claim HRA even when living with parents
An employee can claim an HRA exemption even when living with his or her parents. For this, the employee will have to enter into a rental agreement with the parents to pay rent every month. Also, parents will have to show this rent as income in their ITRs.
Read More: Income tax return filing: What is ITR 1 Sahaj form? Check eligibility and steps to file online
You can claim an exemption even after missing the deadline
In case an employee missed the deadline to submit valid documents to claim exemption, he or she can do so at the time of filing the return.
Avail HRA exemption along with home loan benefit
You can claim HRA as well as take a home loan benefits if you are living on rent in one city and your house is in another city.
Claim HRA exemption jointly or for shared accommodation
Even if you are living in shared accommodation, you can claim an exemption. But for this, the lease agreement should mention your name as the tenant of the shared property along with the share you are paying.
