If a tenant has paid the rent for a year, the House Rent Allowance (HRA) related proof is one of the documents that must be submitted.
As long as they paid rent, people who receive a housing rent allowance (HRA) as part of their compensation structure can lower their tax outgo. One needs confirmation of the rent paid throughout the fiscal year in order to deduct HRA from taxes. Rent receipts or a lease agreement with the landlord can serve as proof.
If you haven’t yet turned in your rent receipt, you can easily generate one by following a few easy steps using this rent receipt generator offered by the Economic Times. To generate a rent receipt, one has to know the landlord name’s and his PAN details.
Click here to use Economic Times’ rent receipt generating tool.
How to claim tax exemption on HRA while filing ITR?
(i) If rent agreement or rent receipts submitted to employer
To reduce TDS on your salary income, you must present rent agreement/rent receipts to your employer. If you choose the old income tax system for the purpose of TDS on salary, you will be eligible for HRA tax exemption.
The employer will determine the tax-exempt portion of HRA after receiving the documentation. Form 16 shows the tax exemption you are eligible for. Depending on which of the requirements/criteria listed for claiming HRA exemption you meet, it is possible that all of the HRA you got during the FY 2021–2022 will be exempt from tax or only a portion of it will be. Keep in mind that if your yearly rent exceeds Rs 1 lakh, you must additionally provide your landlord’s PAN when presenting rent agreements or rent receipts to your employer.
The amount of HRA that is exempt from tax, if any, is likely to be pre-filled if you are preparing your tax return using ITR-1 on the website for electronic filing. Verifying the pre-filled information with the available documents, such as those included in Part-B of Form-16, is advised.
(ii) If rent agreement or rental receipts are not submitted to your employer
You will need to manually compute the tax-exempt component of the HRA you got if you intend to switch to your old tax regime at the time of ITR filing or if you have not provided your employer with documentation. This is so because your company believes the entire HRA payment you received is taxable. Use our HRA calculator by clicking here to determine the tax-free part of your HRA.