HRA means House Rent Allowance, which almost every employed person gets. Tax exemption has also increased under the new tax regime.
Many rules have increased. Including House Rent Allowance. You can also use the house rent allowance for tax saving. But for this you have to keep in mind the changes in income tax.
When will you get exemption of house rent allowance
HRA is given by the company to its employees. Under Section 10(13A) of the Income Tax Act, salaried people get exemption from house rent allowance. The tax payer gets the benefit of this only if he chooses the old tax regime. This benefit will not be available in the new tax regime. That is, if you want exemption of house rent allowance, then you have to choose the old tax regime.
HRA Exemption Rules
You get this benefit only when you live in a rented house. If you have your own house then you will not get its benefit. It is 50 percent of your basic pay or the amount of actual rent paid after 10 percent of basic pay, plus 50 percent of basic pay’s DA or 40 percent of DA, whichever is less. Yes, you get a discount on that.
Many people claim that they pay rent to their spouse to avail house rent allowance, so you cannot claim such exemption under the Income Tax Act. However, rent paid to parents is included in this. You will have to submit the rent receipt as proof.
Factors Affecting House Rent Allowance
- basic pay
- house rent allowance received from the company
- amount of actual rent paid
- Proof of Residence in Metro and Non Metro