How much HRA can be Claimed in ITR?

Your company may provide you with a House Rent Allowance as part of your income to assist with rent payments. The HRA you receive, however, is not entirely taxed. Under the previous tax system, all or a portion of HRA was free from income tax. But how much HRA can be claimed in ITR? The exempt amount is the lowest of the following three:

1. Actual HRA received from the employer during the financial year.

2. 50% of (Basic + Dearness Allowance, DA) if you live in a metro city (Delhi, Mumbai, Kolkata, Chennai); 40% if you live in a non‑metro.

3. Rent paid minus 10% of (Basic + DA) per annum.

For example, if your basic + DA is Rs 6 lakh/year, you receive Rs 2.4 lakh HRA, and pay Rs 2.16 lakh rent annually in Mumbai, the components would be:

1. Actual HRA: Rs 2.4 lakh

2. 50% of salary: Rs 3.0 lakh

3. Rent – 10% of salary: Rs 2.16 lakh – Rs 0.6 lakh = Rs1.56 lakh

Thus, Rs 1.56 lakh is exempt and the balance Rs 0.84 lakh is taxable.

To claim this exemption, you must provide supporting documents rent receipts, rent agreement, and, if annual rent exceeds Rs 1 lakh, your landlord’s PAN when filing ITR or submitting Form 12BB to your employer. I hope you understand how much HRA we can claim in ITR.

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Worrying

how much HRA can be claimed in ITR. Here is your answer.

The amount of House Rent Allowance (HRA) that can be claimed in your Income Tax Return (ITR) in India depends on various factors.

How Much HRA We Can Claim in ITR?

It includes your salary structure, actual rent paid, and whether you live in a metro city or a non-metro city. Here's a general overview:

You can claim the least of the following amounts: Actual HRA received from your employer. Rent paid minus 10% of salary. 50% of salary if you live in a metro city or 40% of salary if you live in a non-metro city.

Suppose you receive an HRA of Rs. 20,000 per month, your monthly salary is Rs. 50,000, and you pay Rs. 15,000 as monthly rent for accommodation in a metro city. Then, your HRA exemption would be calculated as follows:

Actual HRA received: Rs. 20,000 per month × 12 months = Rs. 2,40,000

Rent paid minus 10% of salary: (Rs. 15,000 - Rs. 5,000) × 12 months = Rs. 1,20,000

50% of salary: Rs. 50,000 × 12 months × 50% = Rs. 3,00,000

In this case, the least of the above amounts, i.e., Rs. 1,20,000, would be answer for your query, “how much HRA can be claimed for tax exemption?”

When filing your Income Tax Return (ITR), you can claim the HRA exemption under the "Income from Salary" section. You would need to provide details of your HRA received, rent paid, and the calculation of the exempt portion.

It's essential to keep documents such as rent receipts, rent agreement, and proof of HRA received handy in case of any scrutiny by the Income Tax Department.

The HRA claimed in your ITR may be subject to verification by the Income Tax Department, so it's crucial to ensure accuracy and compliance with tax regulations.

This is how much HRA can be claimed in ITR.

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