The available HRA deduction would be as follows вЂ“Д®ligible HRA deduction (lowest of the three) You are a self-employed individual claiming HRA under Section 80GG. Say you have an adjusted total income of INR 60,000/month and you pay a rent of INR 15,000/month. Deductions under Sections 80C to 80U excluding deduction under Section 80GG for HRA.Short term capital gain under Section 111A of the Income Tax Act, 1961.The adjusted total income for calculation purposes would be calculated as the total income minus the following вЂ“ Rent paid вЂ“ 10% of adjusted total income.It would be the lowest of the following вЂ“ Moreover, the eligible amount for HRA deduction would also be different. However, in such cases, HRA deduction would be allowed under the provisions of Section 80GG and not under Section 10-13A. Then also you can claim a house rent deduction in income tax. Salaried individual but your employer does not offer HRA as a part of your salary component.If you live in rented accommodation and you are вЂ“ HRA exemption in income tax for self-employed and other employees So, besides the rent receipts, that serve as proof of rent, the landlordвЂ™s PAN card copy would have to be submitted to claim HRA exemptions failing which the exemption would not be allowed. However, in such cases, you would have to furnish a copy of your landlordвЂ™s PAN card to claim the exemption. If the aggregate annual rent that you pay exceeds INR 1 lakh, you can claim HRA exemption. You would, thus, be able to avail of an exemption of INR 1.2 lakhs every financial year.Д¬laiming HRA exemption when rent exceeds INR 1 lakh HRA exemption available (lowest of the three) Rent paid вЂ“ 10% of the basic salary (including Dearness Allowance)ДЇor example, if your basic salary (including Dearness Allowance) is INR 50,000/month, you receive a HRA of INR 12,000/month and the actual rent paid is Rs.15,000/month, the exemption that you would be allowed to claim would be calculated as follows вЂ“ДҐ0% of your basic salary (assuming you live in Mumbai).If you donвЂ™t live in a metropolitan city, the rate reduces to 40% of the basic salary (including Dearness Allowance) 50% of the basic salary (including Dearness Allowance) if you live in a metropolitan city.Actual amount of HRA received from the employer.According to the provisions of the section, the lowest of the following amounts would be allowed as an exemption for salaried individuals вЂ“ The tax exemption that salaried individuals can claim on the HRA that they receive from their employers is laid down under Section 10-13A of the Income Tax Act, 1961. HRA exemption in income tax for salaried individuals

In other words, the HRA paid by the employer is considered to be a basic component of employee compensation which can be used by employees to lower their taxable salary income.

Moreover, it is also a tax-exempt allowance wherein employees are allowed to claim exemption on the allowance that they receive from their employers for their rental expenses. HRA forms a part of employee compensation for salaried individuals. House Rent Allowance, or HRA as it is popularly called, is an allowance that an employer pays to his employees who live in rented accommodations.

LetвЂ™s have a look at what HRA is all about.

Since housing is a basic need and the rental income eats into the income of an individual, the Income Tax Act, 1961 introduced the concept of House Rent Allowance (HRA) wherein you can claim tax benefits for the rental expense that you incur on accommodation. While some have a house in their name, others live in rented properties and pay rent, every month, for accommodation. Housing is the basic need of every individual.

Other words for housing allowance