"Hra Form Filling For Claim Procedure .

House Rent Allowance or hra meaning is the amount paid by an employer to the employee to fulfill his rented accommodations. House rent allowance not only saves the expenditure on the rented properties (requires house rent declaration form) but also helps to Save on our tax outgo. It is included under section 10 of the Income Tax Act. An hra exemption section can fully ask for only when an employee resides in a rented property where there works place is set. It can be claimed fully or partially. Below you will get full in-depth information of what is hra, full form of hra, benefits of exemption, is hra taxable, and other related terms that can save your taxable income.

What is House Rent Allowance as per hra section 10? 

According to the provisions of section 10 house rent tax exemption is quite beneficial to every salaried employee in India. No self-employed person can claim HRA only the salaried persons have the right to get the house rent allowance form. If any person lives in their own house or property and does not pay any kind of rent are not eligible to hra form claim house rent allowance, or hra exemption in itr to save on taxes. 

Basis of HRA calculation 

Basis of HRA calculation 

The basis on which HRA is calculated is as follows: -

• Gross salary

• HRA percentage of salary

• Rent house

• City of rented accommodation

 

The basis on which HRA is Calculated 

The primary basis for calculating the HRA of an individual’s salary. The other such factor on which HRA is built in the city in which an employee resides. If an individual resides in a Metro city, then they are eligible to receive a rebate which is equal to 50% of their basic salary. These Metro cities include Kolkata, Mumbai, Delhi, and Chennai. The entitlement of the house rent allowance for the individuals who do not live in the Metro cities is 40% of the salary. 

To manage the calculation for HRA the salary is resolute by the sum of basic salary, dearness allowance, and other commissions. And if in case an individual does not receive any dearness allowance or commission then HRA will be considered upon 40%-50% of their basic salary.

An insight of stats 

By considering all the probabilities the actual house rent allowance is implicit to be the Lowest among the below-mentioned provisions: -

• The actual room rent that is paid should be less than 10% of the basic salary.
• In case the individual resides in a Metro city 50% of the basic salary is calculated as HRA, and 40% of the basic salary is calculated when a person does not reside in a Metro city.
• The actual amount received as the HRA by the employer.

Eligibility criteria to claim tax on hra deduction

A part of an HRA can be claimed as a hra deduction according to house rent allowance under section 10(13a) of the income tax Act only if the following eligibility criteria are met: - 

• An individual must be a salaried person and not self-employed 
• The person should receive HRA as a salary component.
• You should be paying House rent that is rent receipts should be issued as per the Individuals name.

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How to Calculate HRA (House Rent Allowance)

The calculation of HRA in 2020-21 is the same as the hra calculation for ay 2019-20 and 2015-16. The amount of HRA received by you from your employer is not fully exempt from tax. The tax-exempt portion of the HRA is the minimum of the following:

• Actual HRA received from the employer.
• 50% of the salary if the lodging is in any metro city like Delhi, Chennai, Mumbai, Kolkata, and so on or else 40% for other cities 
• Additional rent paid yearly over 10% of the annual salary

Here salary means basic salary, dearness allowance (DA) (if it includes part of the retirement benefit), and commission received based on a percentage of turnover (commission on sales). No other allowances like special allowance are additional to your salary for computing the tax-exempted HRA amount.

Numerical Example 

To understand the HRA calculations, let us consider an example

Mr. Manohar is a salaried individual who lives in Mumbai. He is living on rent and pays a rent of ₹ 15,000.

The salary component of Manohar includes:

Basis salary*                                                                                â‚¹45000

Dearness allowance                                                                    ₹ 2500

Commission                                                                                  â‚¹ 2500

HRA                                                                                                â‚¹ 20000

Conveyance                                                                                   â‚¹ 2000

Total                                                                                               â‚¹ 72000

Tax-exempt part of Mr. Manohar's HRA will be the lowest of the following, considering his annual salary:

• Actual sum received in form of HRA: 20,000* 12 = 2,40,000
• 50% of the basic salary: .50*50,000*12 = 3,00,000
• Real rent paid deduction 10% of basic salary: 15,000*12 –(.10*50,000*12) = 1,20,000

So, the tax-free part of the Manohar’s HRA is ₹ 1,20,000. Without any expert, it is quite difficult to get it done and understand. If you don’t know where to fill house rent in itr 1, then call us now!

Note: Basic salary includes dearness house rent allowance under section 10(13a) and commission.

Mr. Manohar lives in Mumbai, so 50% of the basic salary is well-thought-out. If Mr. Manohar would not have been a resident of any metro city, the HRA would have been planned as 40% of the basic salary.

Claim Rules for HRA

Fill Form no. 10BA under Section 80GG and then follow the applicable hra exemption rule to understand the house rent allowance rules and regulations so that it becomes easy knowing how to claim hra-

1. The HRA that has been allowed to an individual cannot exceed more than 50% of their basic salary.
2. The exemptions are based on the least of the following mentioned options as a salaried individual cannot claim full rental amount, they pay
   • The actual amount allotted by the employer as HRA
   • Rent paid minus 10% of basic salary.
   • 50% of basic salary if an individual resides in a metro city.
3. We can also avail hra tax exemption along with a home loan.

1. The landlord has to provide with his PAN Card or self-declaration if the annual rent of accommodation exceeds Rs.1,00,000. 
2. 30% tax from the rent amount must be deducted and declared if in case the Landlord is NRI.
3. If you want to claim hra in itr, in that condition taking expert advice is beneficial.

Benefit of HRA

In new hra full form in salary, except living in your own house, you are permissible to claim for hra exemption, but it requires few documentations, and for that, it is required to take the help of a professional legal consultant.

Closure

Many things are required to be well-planned for a house rent rebate in income tax. If you want to get rid of undesired expenses or taxes, then get in touch with us to fill hra form or any other help like GST Registration, FSSAI Registration, ESIC Registration, EPF Registration, and so on. We will be happy to help you in solving queries and getting an instant solution.

By Kanchan Pandey

Content writer & Graphic Designer

Tax Advisory

 

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