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Here's how salaried individuals can claim HRA exemption in income tax return ITR Filing
January, 05th 2021

If you have not claimed HRA exemption through your employer then you can still do that while filing income tax return (ITR) for the financial year.

 

House Rent Allowance (HRA) is the most common and a major component of a salaried individual's pay structure. If you are staying in a rented house and paying rent to a landlord including your parents, then you can claim exemption for the rent paid. Typically, salaried individuals claim this exemption through their employer by submitting house rent receipts (in support of their rent payment) in the last quarter of that financial year.

If you have not claimed this exemption through your employer then you can still do that while filing income tax return (ITR) for the financial year. As the last date for filing ITR for FY20 has been extended to January 10, 2021, you still have time to furnish your ITR.

Here is how salaried individuals can claim HRA in ITR

First, you will have to calculate the exempt HRA amount manually. Worth mentioning here is that you can claim HRA deduction only if you incur expenses towards house rent. Salaried individuals who don’t live in rented accommodation, HRA allowance will be fully taxable for them.

The HRA exemption which a salaried individual is is eligible to receive is the lowest of the following amounts:

1. Actual HRA received

2. 50% of (basic salary + DA) for those living in metro cities (40% for non-metros)

3. Actual rent paid minus 10% of (basic salary + DA)

After calculating the HRA exemption, taxpayers can claim it while filing ITR.

In the ITR form, taxpayers are required to provide the break-up of salary, which means the basic salary including all allowances. Then you have to enter the allowances that are not exempted. For HRA, you have to enter the non-exempt part of HRA and other allowances that are not tax-exempt. Worth mentioning here is that taxpayers will also have to declare the amount of HRA they are claiming as an exemption.

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