Many rules have increased. Including House Rent Allowance. You can also use the house rent allowance for tax saving. But for this you have to keep in mind the changes in income tax.

When will you get exemption of house rent allowance

HRA is given by the company to its employees. Under Section 10(13A) of the Income Tax Act, salaried people get exemption from house rent allowance. The tax payer gets the benefit of this only if he chooses the old tax regime. This benefit will not be available in the new tax regime. That is, if you want exemption of house rent allowance, then you have to choose the old tax regime.

HRA Exemption Rules

You get this benefit only when you live in a rented house. If you have your own house then you will not get its benefit. It is 50 percent of your basic pay or the amount of actual rent paid after 10 percent of basic pay, plus 50 percent of basic pay’s DA or 40 percent of DA, whichever is less. Yes, you get a discount on that.

Many people claim that they pay rent to their spouse to avail house rent allowance, so you cannot claim such exemption under the Income Tax Act. However, rent paid to parents is included in this. You will have to submit the rent receipt as proof.

Factors Affecting House Rent Allowance

• basic pay
• house rent allowance received from the company
• amount of actual rent paid
• Proof of Residence in Metro and Non Metro

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At the same time, under the new tax regime, the tax exemption limit has also been increased. Even after increasing the tax limit, if your income is coming in the tax category, then you can save tax by making multiple claims under the old tax system. You can also save tax by claiming house rent allowance under the old tax regime.

What is HRA?

House Rent Allowance is a type of allowance, which is given by an employer to its employee in lieu of payment of house rent expenses. HRA is included as a component of the salary of the employee. According to Rule 2A of the Income Tax Act, the benefit of HRA exemption is given to salaried people under section 10(13A). This exemption is not given under the new tax regime.

Know how to get benefit?

Let us tell that a person gets the benefit of HRA only if he chooses the old tax regime. If you choose the new tax regime, then you will not get the benefit of HRA. In such a situation, if you want to take advantage of the tax exemption available under HRA, then you will have to choose the old tax regime. Keep in mind, if the person receiving house rent allowance is living in his own house, then he does not get the benefit of HRA exemption and this entire amount comes under the tax net.

How to calculate tax exemption on HRA?

– 50 percent of basic pay plus DA for those living in metro cities

– 50% of basic pay plus DA for those living in non-metro cities

Actual rent paid less than 10% of basic pay plus DA

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The post HRA Exemption Rules: Know what are the tax exemption rules for claiming HRA? first appeared on Rightsofemployees.com.