Understanding HRA Rebate: What You Need to Know About Criteria, Documents, and Notifications in Government Service

Criteria for Granting HRA Rebate

1. What are the criteria for granting HRA rebate when calculating Income Tax?

Documents Required for HRA Rebate

2. What documents does one need to obtain from employees as substantial proof to justify that they are residing in a rented accommodation?

Mandatory Notification in Government Service

3. In Government Service, according to Service Rules, is it mandatory for an employee to inform the department/office about their residential address before receiving HRA rebate?

Criteria for Rebate Calculation of HRA

1. There are three criteria for the rebate calculation of HRA. The amount of allowance is the lowest of the following three limits:
- Actual HRA received from the employer.
- Actual rent paid less by 10 percent of salary.
- 40 percent of salary for non-metro cities or 50 percent if the rented premises are in metro cities.

Submission of Rent Receipts

2. As an employee, you need to submit the rent receipts to your employer showing the amount of actual rent paid. That proof is enough to justify that you are staying in rented accommodation, but the property should not be in your name.

Criteria for Granting HRA Rebate in Income Tax Calculation

1. What is the criteria for granting HRA rebate while calculating Income Tax?

Ans.:

I. If one is staying in their own house, then there won't be any HRA deduction.

II. If staying in a rented house, then a deduction is allowed under Section 10(13A) after submitting a copy of the rent agreement and rent receipts.

III. There are three conditions, the least of which is exempt under Sec. 10(13A) of the Income Tax Act:

a. Actual HRA Received

b. Excess of Rent paid over 10% of Salary

i.e. Rent Paid: 20000 P.A.

Less 10% of Salary (Excluding benefits and Perquisites): 10000 P.A.

Total: 10000 P.A.

c. 40% of Salary (Excluding benefits and Perquisites) (50% for Metro city)

Documents Required for HRA Rebate

2. What documents does one have to take from employees as substantial proof to justify that they are staying in rented accommodation?

Ans.: Copy of Rent Agreement and Rent Receipts.

Government Service and HRA Rebate

3. Whether in Government Service, as per Service Rules, is it mandatory for the employee to inform the department/office regarding their residential address before getting HRA rebate?

Ans.: No, it is not necessary, but one has to inform.