Understanding HRA Exemptions: Section 10(13A) & Rule 2A Explained for Rent Allowance Claims and Eligibility Criteria
House Rent Allowance (HRA) is provided by employers to employees for rented housing expenses. Under Section 10(13A) and Rule 2A of the Income Tax Act, employees can claim HRA exemptions if they pay rent and do not own the premises. The exemption is the lowest of the actual allowance received, rent paid exceeding 10% of salary, or 50% of salary in major cities (40% elsewhere). Salary includes basic pay, dearness allowance, and commission. HRA is not exempt if the employee owns the residence. Rent above 1,00,000 requires the landlord's PAN or a declaration. Rent paid to a spouse is not eligible for exemption.
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