Housing Loan Assessee are provided with the leased accommodation by his/her employer and probably he may not be receiving the House Rent Allowance (HRA).
For the mass benefit, we are elaborating the provision related to availability of deduction to the salaried assessee towards the rent payment.
Assessee receiving HRA from Employer:
Salaried Assessees who are in receipt of HRA from an employer can claim an exemption u/s 10(13A) of the Income Tax Act-1961 read with Rule 2A of the Income Tax Rules, 1962. The least of following can be claimed as deduction u/s 10(13A):-
For the mass benefit, we are elaborating the provision related to availability of deduction to the salaried assessee towards the rent payment.
Assessee receiving HRA from Employer:
Salaried Assessees who are in receipt of HRA from an employer can claim an exemption u/s 10(13A) of the Income Tax Act-1961 read with Rule 2A of the Income Tax Rules, 1962. The least of following can be claimed as deduction u/s 10(13A):-
- An amount equal to 50% of salary, where the residential house is situated at Bombay, Calcutta, Delhi or Madras and an amount equal to 40% of salary where residential house is situated at any other place;
- House rent allowance received by the employee in respect of the period during which the rental accommodation is occupied by the employee during the previous year; or
- The excess of rent paid over 10% of salary.
Following points need to be taken in to consideration while calculating the amount of HRA admissible as exemption u/s 10(13A):
- “Salary” for the purpose of computation of exemptions u/s 10(13A) means Basic Salary and includes Dearness Allowance if terms of employment so provide. It also includes commission based on a fixed percentage of turnover achieved by an employee as per the terms of contract of employment AND EXCLUDES ALL OTHER ALLOWANCE & PERQUISITE.
- Exemption is not available where an employee lives in his own house, or in a house for which he doesn’t pay any rent.
Assessee not receiving HRA:
Any individual who is not in receipt of HRA from the employer can claim deduction towards rent payment for residential accommodation u/s. 80GG of the Income Tax Act.
The condition precedents for deduction u/s 80GG are as under:
Any individual who is not in receipt of HRA from the employer can claim deduction towards rent payment for residential accommodation u/s. 80GG of the Income Tax Act.
The condition precedents for deduction u/s 80GG are as under:
- He has to prepare a declaration in Form No.10BA.
- He or his minor child, spouse or HUF of which he is a member, should not be owner of a house at the place where he ordinarily resides or performs his duties; or he should not be owner of any house at any other place, the income therefrom is to be determined under section 23(2) (a) or, as the case may be, under section 23(4) (a) (i.e., income from self-occupied house property).
Subject to compliance of the other stipulations mentioned above, housing loan assessee can claim deduction towards the rent paid for residential accommodation.
