House rent allowance under Section 10(13A) of Income Tax Act

Salaried employees in India can claim tax deductions on the house rent allowance (HRA) component of their monthly salary under Section 10(13A), Rule number 2A of the Income Tax Act. However, to claim this exemption, taxpayers must meet certain requirements.

See also: Can you claim HRA tax exemption for rent paid to spouse?

 

Conditions to claim rebate under Section 10(13A)

• HRA should be a part of the salary package
• Only salaried individuals can claim deductions
• You should live in a rented house in the city where you work
• Deduction is available only for the period during which the accommodation is occupied
• The tenant must provide proof of rent payment

 

HRA deduction limit

The HRA deduction under Section 10(13A) is based on your salary, the HRA component of your salary, the actual rent paid and your place of residence.

 

HRA exemption limit

The HRA exemption that a salaried person is eligible to receive is the lowest of the following amounts, according to Rule 2A of Income Tax Rules 1962:

• The actual HRA
• 50% of your basic salary plus DA if you live in a metro city; 40% for non-metros
• Actual rent paid minus 10% of your basic salary plus DA

 

HRA calculation sample for metros

Delhi-based Mrinalini Sen’s basic monthly salary is Rs 50,000 and she receives Rs 18,000 as HRA. For her rented home, she pays Rs 15,000 as monthly rent. In her case, the deduction will be the least of the three amounts:

*50% of her basic salary: Rs 25,000

*Actual HRA: Rs 18,000

*Actual rent minus 10% of the basic salary: Rs 10,000 (least of the three)

This makes her annual deduction Rs 1.20 lakh

 

HRA calculation sample for non-metros

Leena Shrivastav earns Rs 20,000 as basic salary. Her HRA is Rs 7,000 and she pays Rs 6,000 for her rented quarters in Lucknow. In her case, the deduction will be the least of the three amounts:

*40% of her basic salary: Rs 8,000

*Actual HRA: Rs 7,000

*Actual rent minus 10% of the basic salary: Rs 4,000 (least of the three)

This makes the annual deduction Rs 48,000.

 

FAQs

When can I claim tax exemption on HRA?

You can claim tax exemption on HRA if you pay rent for your residential accommodation.

What is the Income Tax Act Section 10(13A)?

Section 10(13A), rule number 2A, of the Income Tax Act, allows salaried individuals to claim exemptions on house rent allowance.

How much HRA can be claimed without proof?

If an employee gets an HRA of up to Rs 3,000 per month, they don’t need a rent receipt to claim an HRA.

Can I claim HRA without paying rent?

No, you cannot claim HRA without paying rent.

Can we claim 100% HRA?

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

Can we claim house rent in the new tax regime?

HRA exemption is not available under the new tax regime.

What if I don’t receive HRA?

If you pay rent for living in a residential property but do not receive an HRA, you can claim a deduction under Section 80GG.

Got any questions or point of view on our article? We would love to hear from you. Write to our Editor-in-Chief Jhumur Ghosh at jhumur.ghosh1@housing.com