Claiming HRA in India

Visakh Vijayan
2 min readDec 9, 2023

HRA or House Rent Allowance is a part of your salary slip if you look closely. What that means essentially is that your company is giving you a certain amount (in your CTC) that can be claimed as a deduction while filing your ITR at the end of the FY.

What you need

  1. You need a rental agreement with your landlord that states things like rental property address, landlord name, tenant name (you), the agreement tenure (usually 11 months), any security deposits, etc.
  2. Rental receipts for the rent paid to the landlord by the tenant. ClearTax allows you to do this in a jiffy.

Rental Agreements can be created easily via eDrafter.com or Housing.com. The process is to make up an agreement, print it on stamp paper, and get it approved by a Sub-Registrar. All this is taken care of by the websites and you have to pay around Rs. 500 to them. I think they mail an eStamp paper these days.

For people who have work from home (you lucky …) still going on, you can show your parent's house as the property and pay rent to them. Just make sure

  1. You have the same rental agreement.
  2. The house is in your mother’s or father’s name (make sure you are nothing with the house)
  3. And you have rental receipts. Again rely on ClearTax.

Also if you are paying more than 1 Lac per annum, then you will have to produce the PAN card of the landlord (or parents). The income paid is also going to be taxable for them in the Income from House properties head.

How much deductions?

The main question. Your HRA can be the minimum of —

  1. The HRA that you get per annum. This is just 12 * what you get as HRA in your pay slip.
  2. 50% of Basic + DA if you live in a metro or 40% if you live in a rural area. Most people don’t have DA these days.
  3. Excess of whatever you pay as rent in a year minus 10% of Basic per year. So basically Rent — 10% of Basic = HRA deduction.

The 3rd part is what usually applies to all because the basic salary is usually a big part of your salary if you draw a handsome salary. Keep the rental receipts in hand and get them signed. If you live in a rural area with your parents and have a good income, maybe it won’t be much beneficial but for people living in metros at huge rentals that could be a good chunk.

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Visakh Vijayan

Techie from Kerala, India. Days are for coding, nights for weaving tales of tech, travel, and finance. Join me in exploring this multifaceted journey