ITR Filing: If you work and live in a rented house, as well as the salary structure includes house rent allowance (HRA), you can claim for tax deduction
For Assessment Year 2020-21 (AY2020-21), the Income Tax Department has again extended the deadline for filing income tax returns with corporate and business houses on the demand of common people. The Central Board of Direct Taxes (CBDT) has extended the date of filing ITR to 10 January 2021 for individual taxpayers who do not have their return audited. At the same time, the last date for filing ITR for the taxpayers whose returns are audited has been February 15, 2021. Those who have not yet filed their returns, hurry, otherwise it may have to pay fine. Today we are going to tell you who can claim tax deduction on HRA in filing ITR and what is the method of…
The ITR-1 for AY2020-21 has been combined with Form 16, to enable taxpayers to file ITR. If you work and live in a rented house, as well as your salary structure includes House Rent Allowance (HRA), then you can claim for tax deduction under section 10 (13A) of the Income Tax Act. For this, receipt of rent agreement or house rent with the landlord is necessary. The total taxable income of the taxpayer living in a rented house is calculated by subtracting the HRA component from their total income. But if a taxpayer receiving salary stays in his house or does not pay house rent, then the amount received as HRA in his salary comes under the tax net.
Business person does not have the benefit of tax exemption
Tax can be saved on the income earned in the form of HRA only by the working person whose salary includes HRA and who lives in rented house. The person doing his business does not get the benefit of tax exemption on HRA. It is not necessary that you pay rent to the landlord only to avail tax exemption under HRA. You can also pay rent to your parents to get tax benefits. But then the parents will have to pay income tax on this by showing it as income coming from the house or property. But this rule does not apply to spouses, as it is not allowed under the rules of the Income Tax Act.
HRA gets so much tax exemption
Employee can get tax benefit on the total income as HRA. Taxpayers residing in metros can claim tax deduction under HRA at an amount of 50% of basic salary and 40% of basic salary in small towns. Apart from this, tax is also exempt on paying 10% of the total annual income as rent. But if the taxpayer has paid more than Rs 15,000 per month as rent or more than Rs 1 lakh in a year, then it is necessary to provide the PAN number of the landlord to get tax benefit on HRA.
Here’s how to get tax rebate on HRA
If the employee owns a house but resides in a rented house in the same city or another city, he can still get tax exemption on HRA. Tax exemption on house rent allowance, tax rebate on interest paid on home loan (section 24b) and rebate under section 80C on repayment of housing loan can be taken together. If the employer is not given HRA in salary to the employee, then income tax relief under this section will not be available. However, tax deduction on the rent paid can be charged under section 80GG of the Income Tax Act.