Who can claim HRA (House Rent Allowance) ?

Employees receive a certain sum of amount as House Rent Allowance (HRA) from their employers, as part of salary package. HRA is taxable under “Income under head Salary” to the extent it is not exempt. The amount of exemption that can be claimed from House Rent Allowance shall be the least of below:

1. Amount of HRA received

2. Rent paid less 10% of salary

3. 50% of salary (in case of Mumbai, Delhi, Chennai,Kolakata) or 40% of salary (in other cases)

When an Employee can claim HRA Exemption ?

HRA exemption can be claimed by employee in the following circumstances –

1. If he is residing in a rented house.

2. If he is living in his parent’s house or spouse’s house, provided he has proof of payment of rent, i.e., rent receipts.

3. If he has let out his own house and resides in a rented house, he is eligible for HRA deduction.

When an Employee can’t claim HRA Exemption ?

HRA exemption cannot be claimed by employee in the following circumstances –

1. If he resides in a house owned by him.

2. If Actual Rent paid does not exceed ten percent of salary.

3. If there is no proof of payment of rent.