Frequently Asked Questions on House Rent Allowance exemption

House rent allowance is paid by an employer to his employee. The employee as per the eligibility under section 10 (13A) can claim exemption from House Rent Allowance (HRA) received every month.

A self-employed person did not get a salary from the employer. Therefore, he can not claim an exemption under section 10 (13A) of the income tax act 1961. However, a self-employed person can claim a deduction in respect of the house rent expenses he incurred for his living under Section 80GG of the income tax act 1961.

How the House Rent Allowance exemption calculated when the employee moved from a non-metro city to a metro city?

House Rent Allowance is calculated based on the city where you live.

If you are living in a metro city then the calculation will be different compare to the House Rent Allowance (HRA) exemption calculation for a non-metro city.

If you are transferred from a non-metro city to a metro city, in the first place the calculation will be done for the period you lived in a non-metro city and then the calculation for the period you lived in a metro city will be done. Both amounts will be added to arrive at the total House Rent Allowance (HRA) exemption under section 10 (13A).

If you are living in a non-metro city and working in a metro city then your eligibility for House Rent Allowance (HRA) exemption will be calculated based on the provisions applicable to the non-metro city. In this case, the place of accommodation is important not the place of working.

What are the documents required to claim House Rent Allowance (HRA) exemption?

You need not submit anything to the income tax department to claim the HRA exemption. At the beginning of the year, you need to provide a self-declaration to your employer stating the amount that you are paying to your landlord as house rent.

At the end of the year, your employer will be asking for original rent receipts and a photocopy of your rent agreement. You need to provide those receipts and copies of the agreement to your employer. Your employer may ask you two house rent receipts, one for the beginning of the year and the other for the end of the year.

You need to keep these receipts and rental agreement with you. In the future, if it’s asked by the income tax department, then produce the same to them.

Question: I own a house and taken rented accommodation at my work location as the owned house is in a different city. Can I claim HRA exemption for the rent I paid?

Yes, you can claim the House Rent Allowance (HRA) exemption for the rent you paid to your landlord for the rented accommodation.

One can even claim the HRA exemption along with the benefit of home loan if he has taken a loan for building his own house.

Can I pay rent to my father to avail HRA benefits?

Yes, you can claim HRA exemption benefits for the rent that you pay to your father. But make sure that your father has taken the rent received from you into his taxable income.

Income Tax Provision for House Rent Allownace

is a fellow member of the Institute of Chartered Accountants of India. He lives in Bhubaneswar, India. He writes about personal finance, income tax, goods and services tax (GST), company law and other topics on finance. Follow him on facebook or instagram or twitter.

One thought on “Frequently Asked Questions on House Rent Allowance exemption”

  1. Dear Sir,

    I live in Delhi and my Mom has a house in Rajasthan. Now can I pay rent to her in Rajasthan and claim as HRA?

    Thanks in advance.

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