HRA Tax Exemption Getting Rejected Despite Submitting All Proofs? Here's What You Should Know!

Salaried individuals can claim certain benefits while filing their income tax return (ITR) and one of the major such benefits is claiming House Rent Allowance (HRA).

This is a financial benefit only salaried individuals can claim for tax deduction if their salary includes an HRA component.

HRA Claims

Though there is no need to submit proof in your Income Tax Return (ITR) to claim HRA benefits, taxpayers should still be careful.

All HRA documents need to be provided to the employer and in the past many employees have been caught submitting false information about HRA to their employers.

This can further invite trouble for salaried employees.

There are times when the information is not actually false but it is just odd. For instance, in some cases it has been found that a husband is paying rent to his wife, who has no income other than that rent, and then claiming HRA tax exemptions.

While such transactions and HRA claims can be allowed they invite far more scrutiny than typical cases.

When Can Employees Avail HRA Exemption?

HRA tax exemption is available only for employees who have an HRA component in their salary structure under Section 10 (13A).

Those who are not salaried need to use Section 80GG to claim benefit for house rental payments, but the rules and conditions for that are different from rent HRA tax exemption (Section 10 (13A)).

The tax exemption for HRA benefit under Section 10 (13A) is the minimum of:

• The total amount of HRA received
• 50% of salary (basic salary + dearness allowance) if living in metro cities or 40% for non-metro cities
• Actual rent paid - 10% of (basic salary + DA)

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