HRA exemption Can I claim HRA for more than one house for tax savings? Know the rules here

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Tax Saving Tips: HRA exemption will be available only in respect of the residential house rented by you. In such a situation, you will be able to claim HRA only on the basis of rent paid for your house.

Sachin Patel lives in a rented house in Mumbai. His parents live in another rented house in Ahmedabad. He is paying rent for both the houses. He has the rent agreement and rent receipts of both the houses. In such a situation, their question is whether House Rent Allowance (HRA) can be claimed on the rent of more than one property? It is possible that your question may also be similar to Sachin’s. If yes then this news is useful for you.

Receive special allowance from employer

HRA exemption is available under section 10(13A) of the Income Tax Act. Further, Rule 2A of the Income Tax Act prescribes the conditions to be satisfied to claim HRA exemption. One of the conditions prescribed in Rule 2A is that the allowance should be paid to the employee by his employer exclusively to meet the expenditure actually incurred on payment of rent in respect of the residential house occupied by the taxpayer.

Rebate will be available on residential house:

HRA exemption will be available only in respect of the residential house rented by you. In such a situation, you will be able to claim HRA only on the basis of rent paid for your house. Even if you pay rent on your parents’ house, you will not be able to claim HRA on it. There is also a limit on the amount of HRA you can claim. Under this, you can claim a maximum of 50 percent of your basic salary.

Think of it like this, for example, if your basic salary is Rs 50,000 per month and you get HRA of Rs 20,000 per month. But you pay rent of Rs 30,000 every month. So your HRA exemption will be Rs 20,000 per month and Rs 2.4 lakh annually for each financial year. Here it is important for you to note that HRA exemption is a deduction from your taxable income. This means the lower your taxable income, the lower your income tax liability.

If you are claiming HRA for more than one property, the Income Tax Department may scrutinize your claim. Therefore, claim HRA as per rules. It is important to maintain proper documentation and ensure that you are eligible to claim HRA for both the properties. You should submit the rent agreement of both the properties, rent receipts of both the properties to your employer as well as a declaration from your employer stating that you have not claimed HRA for both the properties together.

Claim HRA, HRA, HRA Exemption, Special Allowance, Tax Saving Tips

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