Emotions and Love is what nurtures and makes a house- a home whether it might be rented or owned. However your journey might have a sweeter turn if you could possibly claim a HRA (House Rent Allowance) provided under your salary agreement by your company as an incentive to bring down rental expenses.
CRITERIA
- You as an employee must be surely receiving HRA by your affiliated company as registered under documents.
- Your yearly expense for rent should be more than 1,00,000 and more than 10% of your salary.
DOCUMENTATION
- You will be requiring your Rent Agreement papers along with the signature of your land lord. Also importantly mention rent paid, date started living, address, name and phone numbers.
- Rent Receipts to be collected from Landlord.
- PAN card of your landlord if your rent exceeds 1,00,000 a year.
STEPS
- After collection of all your documents, you need to submit the followings to your HR department along with the form provided by the company.
- The company can have various modes of payment- quarterly, yearly or monthly.
- Three factors will be used by your company to determine the HRA exemption: Received the actual HRA. If you live in a metro area, you will receive 50% of your base pay, if not, you will receive 40%. The amount of rent paid less 10% of your base pay. The HRA exclusion is the least among these three numbers.
- Make certain that the exemption granted by the HRA is appropriately shown on the Form 16 that your company provides when you file your income tax return.
- Verify the amount that is exempt again. If your parents own the home and report the rental income on their tax forms, you can pay them rent and still be eligible for HRA.
