What are some steps for claiming HRA deduction?

Any rules for claiming HRA deduction?

HI Adarsh,

I researched into some rules that are applicable for HRA claims are listed as follows-

  • Your allotted HRA cannot exceed more than 50% of your basic salary.

  • As a salaried employee, you cannot claim for the full rental amount you are paying. Your exemption will be based on the least of the below mentioned options:

    The actual amount allotted by the employer as the HRA.
    Actual rent paid less 10% of the basic salary.
    50% of the basic salary, if the employee is staying in a metro city (40% for a non-metro city).

  • You can also avail tax benefits of HRA along with a home loan.

  • In case you stay with your parents, you are eligible to pay rent to your parents and collect a receipt for HRA claim. However, similar rules don’t allow you to pay rent to your spouse and claim a tax exemption.

  • If the annual rent of your accommodation exceeds Rs.1,00,000, then presenting the landlord’s PAN card is mandatory. Also, in case the landlord does not have a PAN card, he/she can provide a self-declaration.

  • Another important rule is that in case your landlord is an NRI, you must deduct 30% tax from the rent amount that needs to be declared.

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