Hi, I am a salaried employee. I have an HRA component as part of my salary. I live in a rented house, but I could not submit rent receipts on time because my landlord didn’t sign the document. So, I have not claimed HRA through my employer. Can I claim it while filing an ITR?
-Harsh Shukla
Read More: IDFC Ltd, IDFC Financial Holding Merge With IDFC FIRST Bank
Reply by Alok Agrawal – Partner – Deloitte India
Firstly, you must know if you choose to shift to the new tax regime, you will not be entitled to any deduction or exemption on your house rent allowance (HRA). This means the amount you receive as HRA from your employer will be fully taxable under the new regime.
On the other hand, if you opt for the old tax regime, you will be eligible for HRA relief. The HRA component of your salary may already be fully taxable, considering you haven’t claimed rental expenses.
It happens because employees often need help getting their rent receipts signed by the landlord within the year-end payroll cut-off dates stipulated by their employers.
Read More: Top 5 Investment Options For Working Women In India
In such cases, employers would withhold TDS on the entire HRA paid to such employees. While such employees would have a cash flow impact, they should not lose out on this exemption claim so long as they have opted to be taxed under the old tax regime (as mentioned above). These employees should make this claim in the tax return form by completing the relevant particulars, i.e. indicate the HRA received from the employer and the correct amount exempt under Section 10(13A) – the disclosure requirements are slightly different in Forms ITR1 and ITR2.
Assuming all other taxes are fully paid, this HRA exemption claim would result in a tax refund. In view of such a refund claim, it is possible that the tax authorities may seek to verify that all relevant conditions for claiming HRA exemption are satisfied during assessment proceedings. So, such employees must ensure that they have all the supporting documents (e.g. rental agreement, rent receipts and PAN of the landlord – if you annually pay rent of more than Rs 1 lakh).
Read More: HDFC merger: Good news for HDFC Fixed Deposit customers, FDs to have Rs 5 lakh DICGC guarantee
So, in a nutshell, if you choose to remain under the old tax regime and wish to avail of HRA benefits, you must get the rent receipts signed before time from your landlord to save on taxes.
