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What is HRA?

HRA stands for "House Rent Allowance." It's a component of salary provided by employers to employees to cover their rental expenses for accommodation. HRA received by an employee is eligible for tax exemption under certain conditions specified by the Income Tax Act, 1961. The exemption is based on factors such as the actual rent paid, the amount of HRA received, and the city of residence.

What is an HRA calculator?

HRA (House Rent Allowance) calculator is a tool used to determine the tax exemption on the House Rent Allowance received by an employee from their employer. It helps in calculating the amount of HRA exemption that can be claimed under the Income Tax Act, based on factors such as the employee's basic salary, actual rent paid, and the city of residence.

How much of my HRA is exempt from tax?

The amount of HRA exempt from tax is determined based on the lowest of the following three calculations:

Actual HRA received from the employer.
50% of the employee's basic salary and dearness allowance, if residing in metro cities (or 40% for non-metro cities).
Actual rent paid minus 10% of the basic salary.

What are the conditions for claiming HRA exemption?

To claim HRA exemption, certain conditions must be met:

The employee must receive HRA as part of their salary package.
The employee must be paying rent for accommodation.
The employee must not own the accommodation for which they are claiming HRA.

What are the documents required to claim your HRA exemption?

Documents needed to claim HRA exemption typically include:

Rent receipts issued by the landlord.
It depends on the amount of rent paid:
- If your monthly rent is less than Rs 3,000 - No rent receipts are required
- If your monthly rent is more than Rs 3,000 - Rent receipts are to be submitted
- If your monthly rent is more than Rs 8,333, the PAN of the landlord is also required.
- If the landlord does not have a PAN, a declaration from the landlord is to be submitted.
Rental agreement or lease agreement.
Salary slips indicating HRA received.
PAN (Permanent Account Number) of the landlord if the annual rent exceeds a specified limit.

How HRA works for some special cases

For self-employed individuals

They cannot claim HRA as it is a benefit provided by employers.

For people living in non-metro cities

The HRA exemption criteria do vary for individuals residing in non-metro cities.

For people claiming tax exemption in HRA without rental agreements

They may face challenges in providing proof of rent payment.

If you pay rent to your family members

Certain conditions must be met to claim HRA exemption. These typically involve:

The relationship with the family member should be a bonafide tenancy, with market rent being paid.
You need to have documented proof of rent payments made to the family member. Bank transfers or rent receipts are essential.
The family member you pay rent to cannot be a co-owner of the property.

Rent shared with the spouse

When sharing rent with your spouse for HRA calculations:

Both spouses must be co-tenants on the rental agreement, with individual rent receipts reflecting their respective shares of the rent paid.
Each spouse should provide proof of payment for their portion of the rent, ensuring compliance with HRA regulations and accurate submission for HRA benefits.

Individuals whose employers don't pay HRA

Even if your employer doesn't offer HRA, you can still claim a deduction for rent paid under Section 80GG of the Income Tax Act and you can also check your income tax liability using our Shriram Life Online Income Tax Calculator.

How to calculate HRA in Salary?

House Rent Allowance (HRA) is a benefit offered by the employers in India to help employees manage their housing expenses. It's a component of your salary specifically intended to offset the cost of renting a residence.

How to Use Shriram Life's HRA Calculator?

To use Shriram Life's HRA calculator:

Visit the Shriram Life website.
Locate the HRA calculator tool under calculators tab.
Input relevant details such as basic salary, HRA received, rent paid, etc.
The calculator will then provide you with the amount of HRA exempt from tax.

What is a Rent Receipt and Why do you Need Rent Receipts?

A rent receipt is a document issued by the landlord to the tenant acknowledging the rent payment. It serves as proof of payment of rent and is essential for claiming HRA exemption while filing income tax returns. Shriram Life provides a rent receipt generator on its HRA calculator page, which is accessible by the tenants—free of cost.

What are the benefits of a rent receipt and how can you get it online?

Rent receipts offer several benefits for both tenants and landlords. Firstly, they serve as official documentation of rent payments, providing tenants with proof of payment for their records.
This documentation can be crucial for tenants when applying for loans, visas, or other official purposes. Additionally, rent receipts help landlords maintain organised financial records and track rental income for tax reporting purposes.

Steps to follow to get Online Rent Receipts

To obtain online rent receipts from Shriram Life's HRA calculator, follow these steps:

Step 01
Visit the Shriram Life HRA calculator page.
Step 02
Select to the option for generating rent receipts.
Step 03
Enter the required information such as your name, address, rental amount,
landlord details, and rental period.
Step 04
Verify the entered details for accuracy.
Step 05
Once verified, submit the information to generate the rent receipt.
Step 06
Review the generated rent receipt to ensure all details are correct.
Step 07
Download the rent receipt for your records or submission as needed.

FAQ's

Is the Shriram Life HRA calculator free to use?

Yes, the Shriram Life HRA calculator is free to use.

What does basic salary mean for HRA calculations?

Basic salary refers to the fixed portion of salary before any allowances or deductions.

How does the city I live in affect my HRA exemption?

The city you live in affects your HRA exemption as different cities have different percentages for calculating HRA exemption.

What if I pay rent in advance or have multiple rent agreements?

If you pay rent in advance or have multiple rent agreements, you can still claim HRA exemption based on the actual rent paid during the financial year.

Do I need to submit proof of rent with my tax return?

Yes, it is mandatory to submit proof of rent while filing your Income Tax returns.

Can I claim HRA by paying rent to my parents?

Yes, you can claim HRA by paying rent to parents if the parents own the property and you should not possess any ownership in that house.

Can I claim HRA if I am also claiming home loan deductions?

Yes, you can claim both House Rent Allowance (HRA) and home loan deductions simultaneously, provided you meet the eligibility criteria for both. HRA is for individuals living in rented accommodation, while home loan deductions are for those who have taken out a loan to purchase or construct a house. However, certain conditions and restrictions may apply.

Can I get both an HRA tax exemption and a tax rebate on my home loan?

Yes, you can claim both HRA exemption and tax deduction on your home loan interest, provided you meet the eligibility criteria for both. This allows you to save tax on both your rent paid and home loan interest.

Can I claim HRA tax exemption when my landlord is an NRI?

Yes, you can claim HRA exemption even if your landlord is an NRI. You'll just need to deduct TDS (Tax Deducted at Source) at a rate of 30% from the monthly rent before paying them.

What is the maximum HRA limit?

The maximum HRA limit is determined based on various factors including your salary, actual rent paid, and city of residence.

Will using an HRA calculator help me save more money on taxes?

Shriram Life HRA calculator can help you understand and optimise your tax savings based on your HRA eligibility and other factors.

What if I changed jobs or cities during the financial year?

If you changed jobs or cities during the financial year, your HRA exemption will be calculated based on the respective periods of employment and residence.

How does HRA work for people who travel frequently for work?

For people who frequently travel for work, HRA exemption may still be claimed based on the days spent at the rented accommodation during the financial year.

Is it mandatory to have a rent receipt to claim HRA?

While it's not mandatory to have a rent receipt for every month, having rent receipts for each month can serve as stronger evidence for claiming HRA exemption.

What if I forgot to submit rent receipts at the declaration?

You can still claim HRA while filing your Income Tax Return (ITR) even if you missed submitting rent receipts to your employer. Just have the receipts handy for verification.

Do I need a receipt for every month?

No, you don't necessarily need a receipt for every month, but you should have documentation covering the entire rental period for claiming deductions, such as accumulated rent receipt, lease agreement or bank statements showing rent payments.

My landlord is refusing to give me a rent receipt. What can I do?

If landlord is refusing, then they can generate the rent receipt using Shriram Life Rent receipt generator and ask them to acknowledge.

Is a generated receipt legally valid?

A generated receipt can be legally valid as long as it contains all the necessary details such as the amount paid, period of payment, landlord's details, and signatures or stamps where required.