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 HRA received every month.

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

How House Rent Allowance exemption calculated when 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 HRA exemption calculation for a non metro city.

If you are transferred from a non metro city to 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 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 HRA exemption will be calculated based on the provisions applicable to non metro city. In this case place of accommodation is important not the place of working.

What are the documents required to claim HRA exemption?

You need not submit anything to income tax department to claim 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 photo copy of your rent agreement. You need to provide those receipts and copy of the agreement to your employer. You 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 the these receipts and rental agreement with you. In future if its asked by the income tax department, then produce the same to them.

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

Yes, you can claim HRA exemption for the rent you paid to your landlord for the rented accommodation.

One can even claim the HRA 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

Editorial Staff at Yourfinancebook is a team of finance professionals. The team has more than a decade experience in taxation and personal finance.

Reader Comments

  1. Manu Tandon

    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.

Comments are closed.