If you and your spouse both receive a House Rent Allowance (HRA) as a part of your salary, you may be wondering if it is possible for both of you to claim HRA exemptions on your income tax returns. The answer is that it is possible, but only under certain circumstances.
As per the Income Tax Act, 1961, an individual who pays rent for a dwelling house occupied by him/herself or any member of his/her family can claim a deduction under the head “House Rent Allowance” (HRA). The HRA is an allowance provided by an employer to an employee to help cover the cost of renting a dwelling.
Rent Agreement for HRA
In order to claim HRA exemptions, you must have a valid rent agreement in place. This rent agreement should be in your name (or your spouse’s name) and should specify the amount of rent being paid and the period for which the rent is being paid. The rent agreement should also be signed by both the landlord and the tenant (you or your spouse).
It is recommended to keep a copy of the rent agreement with you for future reference. It is also a good idea to inform your employer about the rent agreement for HRA exemption claimed, to avoid any discrepancies in the tax calculation.
Claiming HRA Exemptions
If you and your spouse both receive HRA and have valid rent agreements in place, you can both claim HRA exemptions on your income tax returns. However, there are a few things to keep in mind:
- You can only claim HRA exemptions on the amount of rent actually paid, not the full HRA amount received.
- You can only claim HRA exemptions if the rent paid is higher than 10% of your total salary (including HRA).
- You can only claim HRA exemptions if you are living in a rented accommodation. If you own a house or are living with your parents, you are not eligible for HRA exemptions.
- The individual must be receiving HRA as a part of their salary.
- The individual must furnish the necessary proof of payment of rent, such as rent receipts, to the employer
- Before Claiming a HRA, you need to just know which types of rent agreement valid.
What details should the rent agreement include to claim HRA exemption?
To claim the HRA exemption, you need to furnish a rent agreement as proof of the rent paid. The rent agreement should contain the following details:
- Name and address of the landlord
- Name and address of the tenant (you and your wife)
- The amount of rent paid
- The duration of the rent agreement
- The date on which the rent agreement was executed
- Having a type of rent agreement
It is important to note that both you and your wife can claim the HRA exemption only if you are both paying rent separately for different accommodations. If you are living in a shared accommodation, only one of you can claim the HRA exemption.
Conclusion
In summary, it is possible for both you and your spouse to claim HRA exemptions on your income tax returns if you both receive HRA and have valid rent agreements in place. However, you should ensure that you meet the eligibility criteria and only claim exemptions on the amount of rent actually paid. It is always a good idea to consult a tax professional or refer to the income tax rules for the latest guidelines on claiming HRA exemptions.
Regenerate response
Posted by Parul Singh
Legal Guide 