pay guru SPEAKS: accommodate Rent allow is an allowance given by an employer to an employee. The sole purpose of this is to meet the cost of renting a home. Here we hope to clear the doubts you may undergo about HRA. Do note when we have in mind to salary in this article it encompasses basic component and the dearness allowance.1. You can affirm HRA if you complete these three conditions: ~ You have an HRA allowance as part of your salary package.~ You are staying in a rented accommodation and paying contract for it. ~ The rent exceeds 10% of your salary.2. You can affirm rent given to your parents. Let's say you live with parents and pay them rent. This makes your parents the landlords. One of them will have to declare it in his/ her personal income tax go to prevent litigation in the future.3. You cannot claim contract paid to spouse. The relationship between a husband and wife is not commercial in nature; a preserve and wife are supposed to be together. So payment of rent to a spouse will not be accepted by the income tax authorities.4. You will be to keep all your rent receipts since it is the only proof that you are paying rent. HRA exemptions are only available on submission of contract receipts or the rent agreement. However if the HRA is upto Rs 3,000 per month then receipts/ agreement is not mandatory. It is only when your HRA exceeds this amount that you will have to keep the receipts. But it is wise to still keep them because at the time of assessment the Income Tax command may bespeak the receipts/ agreement.5. The actual HRA you ordain be entitled to will be the least of the following:~ The actual amount of HRA received.~ 40% of salary. This increases to 50% if you are renting out the house in Delhi. Mumbai. Chennai or Kolkata.~ Rent paid minus 10% of salary (basic component + dearness allowance)6. The HRA that does not get exempted is taxed. Let's see how it works with an example. Assumptions: HRA per month = Rs 15,000Basic monthly salary = Rs 30,000Dearness allow = NilMonthly rent = Rs 12,000 Rental accommodation is in Mumbai. Exemption:Actual amount of HRA = Rs 15,00050% of salary = 50% x (30,000 + 0) = Rs 15,000Actual contract paid - 10% of salary = Rs 12,000 - [10% of (30,000 + 0)] = 12,000 - 3,000 = Rs 9,000Rs 9,000 being the least of the three amounts ordain be the exemption from HRA. The fit HRA of Rs 6,000 (15,000-Rs 9,000) is taxable.7. If you took a domiciliate loan for a home in one city but reside in another you will be entitled to:~ Tax benefit on principal repayment under Section 80C~ Tax acquire on interest payment under Section 24~ HRA benefit Or even if the home is in the same city but is not ready forcing you to contract a displace you ordain still be entitled to all the above benefits. Of course you can claim tax benefits on the home loan only if your domiciliate is ready to be in during that financial year. Once the construction on your home is end the HRA acquire stops. If you took a home loan got possession of the house undergo rented it out and stay in a rented accommodation you ordain be entitled to all the three benefits mentioned above. However in this case the rent you acquire would be considered as your taxable income. 8. Let's say you took a home give and have bought a home but are not residing in it for genuine reasons. It could be that the domiciliate is at a considerable hold from your bring home the bacon place. Or it could be that the home is rather small and your parents are living in it so you have to be elsewhere. Though your rental accommodation and domiciliate are in the same city you can still get all the benefits.~ Tax benefit on principal repayment under Section 80C ~ Tax benefit on arouse payment under Section 24~ HRA benefit However it is necessary you have some of your belongings at your domiciliate (the one you own) and you be there on and off on during weekends and holidays. Despite this if your employer does not accept and denies your tax benefits you ordain undergo to affirm it at the measure of filing your tax returns. For More Learning. Please Visit "AT A look" Section on the Right transfer Side.
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http://aimoney.blogspot.com/2007/09/how-to-claim-your-hra.html
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