How to claim HRA in income tax return?

For a salaried person who receives HRA as a part of the salary, it is important to know the tax implications. HRA is a house rent allowance provided by the employer as a part of the salary for employees to pay rent to the landlord for a rented accommodation. There is a provision to file for tax return on HRA. In this answer we will take a look at how to claim HRA in income tax return.

Before understanding the process on how to add HRA in income tax return, we must know how much HRA can be claimed in ITR. HRA exemption is the lowest of any of the following:

• The actual HRA;

• 50% of basic salary + Dearness Allowance (DA)

• Actual rent paid - 10% of basic salary plus DA

There are various conditions under which you can claim HRA exemption. Let us have a look at them.

1. When you submit rent receipts to your employer

2. When you don’t submit the rent receipts to your employer

If you have submitted the rent receipts or rent agreement to your employer, it will be prefilled in the Form 16. If you are filing ITR using ITR-1 then most likely the amount will be pre-filled as well, but you must verify it from Form 16 to avoid any discrepancy. 

In case ITR-1 does not carry pre-filled information, then you must add details like taxable portion of your HRA and tax exemption portion of HRA from Form 16

If you have not submitted your rent receipts or agreement copy then you will have to manually calculate the HRA tax exemption portion and fill it in. 

You will have to enter ‘Salary as per provisions contained in Section 17(1) in Form 16 Part B and enter tax exempted HRA in ‘Allowances exempt u/s 10' in the ITR 1. From the drop-down menu, select '10(13A) - Allowance to meet expenditure incurred on house rent’

While filling out my first ITR, I learned that I could claim tax exemption through HRA. But I didn’t know how to claim HRA in ITR, so I called my cousin. My cousin has been working for quite a few years and she was aware of all the steps. Here is what she told me. 

How Can We Claim HRA in Tax Return?

She told me that to claim HRA, certain conditions need to be met and those are

• Live in rented accommodation

• Receive HRA as a part of your CTC.

• Submit valid rent receipts and proof of rent payments.

After this she told me the steps following which I could claim HRA in ITR. Here are the steps

• She told me to calculate the HRA exemption. 

• Followed by calculating my taxable salary by subtracting the exemptions and deductions from the gross salary.

• Then, she told me to use the relevant ITR form and file my income tax return. 

• After this, I was suggested to fill in the HRA details in the tax return form. 

• While filing, she told me to attach the necessary documents, such as the Rent agreement, rent receipts, and Form 12BB. 

And that is all that she told me about how to claim HRA in ITR. I hope this helps.