The house rent allowance (HRA) is one of the common component in the salary structure of an employee. However, not all employees get similar benefit due to difference in the place of residence. The HRA rules allow 50% exemption for metro cities and 40% for non-metro cities. There is a need to amend definition of metro cities under the Income-tax Act.
India Business News: This article discusses the importance of rent receipts and agreements for claiming House Rent Allowance (HRA) tax deductions. Having both rent receipt
To claim HRA from their employers, many salaried employees usually use either rent receipts or rent agreement as proof of the rent paid in a financial year. However, tax experts point out that assessing officer of the income tax department can reject HRA tax exemption claim if any one of the documentary evidence is missing.
The rent received is taxable, but not all of it. There is a 30% standard deduction on rental income. If the spouse gets Rs 6 lakh per year as rent, he/she will be taxed for only Rs 4.2 lakh.