HRA Benefits: People will get benefit from HRA, will save money in Income Tax Return, know the details

Income Tax Return: People also get many benefits while filling ITR. House Rent Allowance (HRA) is also one of these benefits. Tax saving can also be availed through HRA in ITR. Here we know what are the benefits of HRA. Let’s understand…

Income Tax: Only a few days are left in the last date for filing income tax return. People have time till 31 July 2023 to file personal income tax return. By this date, people will have to disclose the income earned in the financial year 2022-23 by filing income tax return. If people are not able to file income tax return till this date, then people will have to fill ITR later by paying fine.

Income tax return

At the same time, while filling ITR, people also get many benefits. House Rent Allowance (HRA) is also one of these benefits. Tax saving can also be availed through HRA in ITR. Here we know what are the benefits of HRA. Let’s understand. According to Raghuram Trikutam, CEO of Descrypt, HRA under section 10(13A) of HRA has the following benefits:

• The biggest advantage is that it lowers your taxable income.
• You can claim deduction on HRA while filing income tax, even if you live with your parents, as long as you submit proof of paying rent.
• You can claim HRA tax benefit even if you are paying home loan EMIs as long as the house is not in the city of employment/residence. If you have a house in the same city of employment and residence, you will need to submit a valid explanation explaining why you cannot live there in order to claim HRA exemption.
• If you are a salaried employee who lives in a rented accommodation, you should consider deduction of HRA u/s 10(13A). This can save a significant amount of tax on your income.

Also know about HRA deduction

• The HRA you can claim as a deduction depends on the city you live in.
  If you live in a metropolitan city (Mumbai, Delhi, Kolkata or Chennai), you can claim deduction of HRA up to 50% of your basic salary.
• If you live in any other city, you can claim deduction of HRA up to 40% of your basic salary.
• You need to claim HRA deduction along with proof of paying rent to your employer. This can be a rent receipt, a copy of your lease agreement or a statement from your landlord.
• You can claim HRA deduction for a maximum of 12 months in a financial year.
• If you have any queries regarding HRA deduction, you should consult a tax advisor.

You also get these benefits

According to Avinash Shekhar, CEO and Founder of TaxNodes, HRA (House Rent Allowance – HRA) is a type of allowance that is given to a person for paying house rent to his landlord. HRA is given in the form of salary and it helps in deducting tax from the income of the individual. However, to get the benefits of HRA, certain rules have to be followed. Which is as follows-

1. Occupancy on rent: You must have bona fide accommodation on rent and have a tenancy agreement in your own name.
2. Salary Structure: You have to pay special attention to HRA in the salary structure. The amount of HRA will be fixed in the salary which may change according to various terms and conditions.
3. Rent Certificate: You will need a rent certificate as proof of rent payment. This is a document provided by the tenant that ensures the details of the payment.
4. Tax Deduction on Salary: While deducting tax from your salary, you can deduct it from your productive salary to take advantage of HRA.
5. Tax Saving: The benefit of HRA is your tax saving, as you can deduct it from your income in the financial year.
6. Tenancy Benefit: You get the benefit of renting a residence which gives you more housing options and option for permanent residence.
7. Increase in Salary: By availing the benefit of HRA there can be an increase in your salary which improves your financial condition.
8. Financial Eligibility: With the benefit of HRA, you can be eligible for bank loans and other financial transactions as your income is less visible.

Along with the benefits of HRA, it is a good financial planning option that gives you the option of permanent residence with tax savings and rental benefits. You should consult your financial advisor and negotiate wisely about the terms and conditions involved.