House rent allowance rules and regulations
There is a house rent allowance which is paid to the employees for the rent that the employee is going to pay in the absence of the company’s quarter.
Now the main question comes which people usually ask about house rent is a taxable income.
The answer is yes, and no both because a part of the house rent is tax-free for people.
The meaning of house rent allowance:
If you are a salaried employee and you stay at a rented place, then you can claim the tax exemption on the rent that is being paid.
The rent can be completely or partially exempted, which totally depends on the situation.
Who all can claim the HRA exemption?
The self-employed or salaried people can claim the house rent allowance exemption under a different income tax section, which is stated in the rules.
What is the section of the HRA exemption?
The HRA exemption is under section 10(13A) in the income tax act.
House rent allowance rules and regulations:
There are three amounts under the HRA rules and regulations where you can get exemptions:
● The actual HRA which an employee gets in a particular year.
● The rent that an employee pays in the excess 10% of his salary.
● If a person is staying in any metro city like Delhi, Chennai, Kolkata or Mumbai, then it is 50% of the salary; otherwise, it is 40%.
The salary for any of this calculation means the normal and basic salary that the employee gets.
The commission is based on a fixed percentage of the employee’s turnover achieved.
The employee won’t be included in getting tax exemption if he is staying in his own house and not paying any rent.
The factors that decide HRA exemptions:
These four factors are considered while getting the HRA exemption which is as follows:
● The actual HRA which is received by the individual
● The actual rent paid by the person
● The city of residence
● The basic salary
Can you claim HRA if it is your own house?
The answer to this question is both yes and no as the situation depends on these two factors:
● You cannot claim a house rent allowance if you are staying in your own house.
● You can claim HRA if you are staying on rent and not in your own house.
Can HRA be claimed by both the husband and the wife?
Yes, both the husband and the wife can claim the HRA if:
● If both the husband and wife are paying rent to the landlord.
● If the husband and wife are giving different rent receipts to the landlord.
The husband and wife can separately claim a proportion of the HRA, but they cannot completely exempt the whole amount.
Is HRA compulsory?
No, there is no allowance that the employee needs to do it because it is up to them if they want to make it part of their salary or not.
It will only be a part of their salary, not the entire salary.