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Rent Receipt
AY 2025–26 Update
How to Claim HRA Exemption When You File Tax Returns
📌 Introduction
House Rent Allowance (HRA) is one of the most common salary components provided to salaried individuals in India. It plays a crucial role in reducing taxable income for employees living in rented accommodation.
However, many taxpayers make mistakes while claiming HRA exemption, especially during Income Tax Return (ITR) filing, due to confusion around documentation, calculation, and compliance requirements.
This guide will help you understand:
- What HRA exemption is & Who can claim it
- Required documents (rent receipts, agreement, PAN)
- Step-by-step process to claim HRA in ITR
- Latest rules (AY 2025–26 updates)
📌 What is HRA Exemption?
HRA (House Rent Allowance) is a component of salary that provides tax relief for rent paid by employees.
- 👉 It is governed under Section 10(13A) of the Income Tax Act
- 👉 Available only under the Old Tax Regime
- 👉 Helps reduce taxable salary partially or fully
👤 Who Can Claim HRA Exemption?
You can claim if:
- You are a salaried employee
- You receive HRA in salary
- You live in a rented house
❌ Who Cannot Claim:
- Self-employed (Use Sec 80GG)
- Living in your own house
- Taxpayers under New Tax Regime
📊 HRA Exemption Calculation Formula
HRA exemption is the minimum of the following three:
1. Actual HRA received
2. 50% of salary (metro) / 40% (non-metro)
3. Rent paid – 10% of salary
Note: Salary = Basic + DA
📊 Example Calculation
Monthly: Basic ₹70k | HRA ₹20k | Rent ₹15k
Annual Totals:
- HRA Received: ₹2.4 Lakh
- 50% Salary: ₹3 Lakh
- Rent - 10% Salary: ₹1.2 Lakh
👉 Exemption = ₹1.2 Lakh (Lowest of above)
📂 Documents Required for HRA Claim
✔ Mandatory:
- Rent receipts
- Rent agreement
- Payment proof (Bank transfer preferred)
- Landlord PAN (If rent > ₹1 Lakh/year)
⚠️ Crucial Risks:
Rent agreement alone is not sufficient. Rent receipts prove actual payment. Without them, claims are often rejected.
🧾 How to Claim HRA Exemption in ITR
✅ Case 1: Submitted to Employer
Reflected in Form 16 and auto-filled in ITR. This is the easiest method.
❌ Case 2: Not Submitted to Employer
Calculate manually and enter under Section 10(13A) in the "Allowances exempt u/s 10" section of your ITR form. Excess TDS will be refunded.
🏦 Special Case: Section 80GG
If you don't receive HRA in your salary but pay rent, you can claim deduction under 80GG (Max ₹5,000/month) by filing Form 10BA.
⚠️ Common Mistakes to Avoid
- Claiming without rent receipts
- Using fake rent agreements
- Not declaring landlord PAN
- Claiming under new regime
- Incorrect calculation
Frequently Asked Questions
Rent agreement and rent receipts are required by the employer before the end of the financial year to allow the deduction for the purpose of Form 16.
In case of rent payment per annum is more than Rs 1 lakh i.e. if your monthly rent is more than Rs. 8,333, the employee needs to provide landlord's PAN number to the employer mandatorily.
This tax benefit is only available to salaried individuals who are provided HRA as a part of their salary. Also, they need to be living in rented accommodation and not their own house.
Yes, you need to submit rent receipts to your employer as proof of rent paid in order to claim HRA exemption. However, if your monthly rent is up to ₹3,000, you are not required to produce rent receipts, as per CBDT guidelines. For rent above ₹1 lakh annually, you must also provide your landlord’s PAN or a declaration if PAN is unavailable.
HRA means House rent allowance in income tax. It means the component of salary received towards the rent payment is allowed as a deduction from taxable salary under section 10(13A).
Documents like rent receipts and rental agreements will be required to be submitted to the employer to claim the HRA exemption. If the payment of rent is more than Rs 1 lakh per annum, then the PAN of the house owner will be required to be submitted. On the basis of these proofs, employers would provide a deduction for HRA in Form 16.
Yes, you can claim HRA without landlord PAN if your annual rent payment is less than Rs 1 lakh. However, it is mandatory to obtain your landlord's PAN when your rent exceeds Rs 1 lakh.
Yes, if your HRA is up to Rs 3,000 per month, you can claim HRA without rent receipts. But, you cannot claim HRA without rent receipts when your HRA exceeds Rs 3,000.
Your employer will not allow HRA exemption if you do not submit the landlord’s PAN number or a declaration that he doesn’t have a PAN number. You can directly claim the excess tax deducted on the same while filing the income tax return for the year.
Yes, the rental agreement is mandatory for claiming HRA. However, few employers allow HRA claims without rental agreements.
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