HRA is an integral component of any payroll compensation plan. In this article you can get to know more about the tax implications and some planning tips on HRA.
1. What is HRA?
House Rent Allowance is an allowance given by an employer to an employee. The sole purpose of this is to meet the cost of renting a home. However it doesn’t mean that an employee owning a house and staying there cannot be eligible to receive an HRA component in his salary. It will just mean that he will not be eligible for any tax benefits.
2. What conditions are to be satisfied to claim the Income Tax benefits on HRA?
You can claim HRA if you fulfil these three conditions:
~You have an HRA allowance as part of your salary package.
~You are staying in a rented accommodation and paying rent for it.
~ The rent exceeds 10% of your salary.
You need to submit proof of payment of rent by way of rental receipts and or rental agreement signed by your landlord to your employer to enable him to process the HRA deduction in your monthly salary. Usually you need to declare the rent you will be paying to your employer and towards the end of the financial year you need to give the above mentioned proof.
To know more details on the HRA allowance tax implications, kindly visit the below link:
HRA Tax Implications Details
