ITR Exemption in HRA: Before filing ITR, you should know everything where you can save tax. Let us tell you that according to the rules of the Income Tax Department, you can claim tax exemption in House Rent Allowance.
It is mandatory for all taxpayers to file income tax return by 31 July 2023. In such a situation, you should know in which places you can save your tax.
If you are a salaried individual , you can claim tax exemption on House Rent Allowance (HRA) even if you are living in a rented house, provided you have valid documents to prove that you pay the rent . have been
Keep this in mind while making a rent agreement
Most people forget to keep in mind that the rent agreement should contain certain clauses to ensure that HRA tax exemption can be claimed while filing the Income Tax Return (ITR).
If the clause is not there in the rent agreement, the income tax department can reject the tax exemption. Tax exemption on rent is also given to those who pay rent to their parents. For this only they need to have valid documents.
What is required for tax exemption?
As per the Income Tax law, while computing TDS on salary, you must have supporting documents like rent receipt to avail HRA exemption. Let us tell you that the rent agreement is a stronger document than the rent receipts.
What should be in the rent agreement for the purpose of income tax?
- In a normal rent agreement, details such as the name and address of both the tenant and the landlord, as well as the PAN and Aadhaar numbers of both the tenant and the landlord should be mentioned in the rent agreement.
- Having the PAN number of the landlord can help you claim HRA tax exemption from your employer if the annual rent exceeds Rs 1 lakh.
- Apart from this, the rent agreement will be considered legally valid only if it is signed by the witnesses, the landlord and the tenant and it is also notarized. The rent agreement should be executed on applicable stamp duty paper as per the laws of the state where the house taken on rent is taken.
Keep the rent receipt
- In case an individual has a rent agreement to claim HRA tax benefit, it is important to submit the rent receipt as well.
- Every tenant should obtain a rent receipt from the landlord for the rent paid during the financial year. The receipt must mention the name of the landlord, address of the landlord, amount paid and TDS deducted, if any.
- Affix revenue stamp if monthly payment in cash exceeds Rs.5,000. The rent receipt acts as another proof when the HRA tax exemption is questioned by the income tax authorities.
