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For individuals that pay rent and live in rented housing, the Income Tax Act of 1961 provides the House Rent Allowance (HRA) as a way to reduce taxes. This clause also applies for individuals who rent to their parents, spouses, or other family members. However, these situations frequently have unique requirements and complications.
It’s important to fulfill all the conditions mentioned under Section 10(13A) to claim the deduction. Any misrepresentation or failure to meet these conditions might lead to tax scrutiny or penalties.
The basic provision of House Rent Allowance specified for exemption under section 10(13A) of the Income Tax Act 1961. Tax Law allows salaried individuals to claim deduction for HRA under section 10 (13A). Said of House Rent Allowance deduction available is the least of the following amounts:
As of last update in the Income Tax Act of 1961, the eligibility to claim HRA depends on various factors, including your relationship with the property owner and the actual payment of rent. House Rent Allowance is typically claimed by individuals who are living in rented accommodation and receiving a specific allowance for the same from their employer.
In case Taxpayer is living with his own parents or spouse & paying them rent, He may still be eligible to claim House Rent Allowance, but there are certain conditions that need to be met specified to be fulfilling Under Section10(13A) the Income Tax Act of 1961.
o Actual Rent paid to owner / landlord.
o landlord Name
o Address of landlord.
o The employee must be a salaried individual & Salary employees must be paying rent for the residential accommodation.
o The employee must not own any residential accommodation in the place where they are currently residing.
o Salary Employees must have proof of rent payment, such as rent receipts or a rental agreement.
o HRA deduction can only be claimed for the current FY.
o Income Tax deduction cannot be claimed if the employee is also claiming a deduction for rent U/s 80GG.
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