In our organization, one of our employees is claiming HRA for the FY 13-14, and his wife is also working in another organization where she is also claiming HRA for the same value. Please kindly advise me on how to consider my employee's HRA claim in this regard. I would appreciate your valuable suggestions and any supported documents.
With regards,
Vijay Kumar Dasari
From India, Visakhapatnam
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With regards,
Vijay Kumar Dasari
From India, Visakhapatnam
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Is your organization a government body?
Terms and Conditions of Employment
What do the Terms and Conditions of employment of your organization say about HRA? Do your employees fulfill these criteria?
Employee's Spouse Employment Concerns
How is your organization concerned with where your employee's spouse is working and what perquisites he or she is receiving as per the terms of that organization? Is the company where the employee's wife is working under your control? Or, is it a subsidiary or sister concern? How can you prevent the wife working in another organization from receiving HRA? Or, is it your intention to deprive your employee of HRA even if he fulfills all the requirements to be eligible for receiving HRA?
Such rules exist within an organization where both the employee and his spouse are working. This is not the case here; so it would be better if you could answer the above questions and explain your authority in terms of HRA for his wife in another organization - whether that other organization has empowered you to decide or dictate the terms of HRA in their organization?
If so, are you receiving any compensation/salary from that other organization? Has your organization allowed you to do this? Before taking any action against your employees, you should ensure your empowerment or limitations. When you answer the above questions, you will be able to understand whether your proposed action is malafide (done with bad or doubtful intention) or bonafide!
Warm regards.
From India, Delhi
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1446Terms and Conditions of Employment
What do the Terms and Conditions of employment of your organization say about HRA? Do your employees fulfill these criteria?
Employee's Spouse Employment Concerns
How is your organization concerned with where your employee's spouse is working and what perquisites he or she is receiving as per the terms of that organization? Is the company where the employee's wife is working under your control? Or, is it a subsidiary or sister concern? How can you prevent the wife working in another organization from receiving HRA? Or, is it your intention to deprive your employee of HRA even if he fulfills all the requirements to be eligible for receiving HRA?
Such rules exist within an organization where both the employee and his spouse are working. This is not the case here; so it would be better if you could answer the above questions and explain your authority in terms of HRA for his wife in another organization - whether that other organization has empowered you to decide or dictate the terms of HRA in their organization?
If so, are you receiving any compensation/salary from that other organization? Has your organization allowed you to do this? Before taking any action against your employees, you should ensure your empowerment or limitations. When you answer the above questions, you will be able to understand whether your proposed action is malafide (done with bad or doubtful intention) or bonafide!
Warm regards.
From India, Delhi
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Claiming HRA by both the wife and husband is correct, whether they stay or work in the same station or not, even if they work in different organizations. Refer to the Income Tax Act rules or ready reckoner for HRA. There is no need to show it under a single head. HRA should be treated as separate heads with liabilities under income tax for each individual.
Regards,
From India, Visakhapatnam
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Regards,
From India, Visakhapatnam
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It is happening that both husband and wife, when working in different places and with different employers, claim HRA separately. In some government offices, they obtain a declaration on the actual payment of HRA supported with rent receipts. In all fairness, HRA paid should be shared and claimed.
HRA Policy Considerations
For the question of whether or not to pay HRA by your office, you should go by your HRA policy rather than investigate whether the spouse also claims or is paid HRA. It's not illegal if both are paid, as it is per the terms and conditions of appointment. However, it is not correct to pay HRA to both if both are residing in the same house owned by either of them, for the simple reason that a spouse does not require to pay HRA to their partner. Some relevant references are provided in the attachment for general information.
Regards
From India, Bangalore
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HRA Policy Considerations
For the question of whether or not to pay HRA by your office, you should go by your HRA policy rather than investigate whether the spouse also claims or is paid HRA. It's not illegal if both are paid, as it is per the terms and conditions of appointment. However, it is not correct to pay HRA to both if both are residing in the same house owned by either of them, for the simple reason that a spouse does not require to pay HRA to their partner. Some relevant references are provided in the attachment for general information.
Regards
From India, Bangalore
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Husband and wife can both claim the HRA only if they are not staying in the same house. Rent receipts should be original. If the monthly rent exceeds Rs 1 lakh in a year, a PAN number and a copy of the PAN card are mandatory. Whether it is Government or Non-Government, the IT department can track all transactions through the PAN number only. Hence, only one person can claim the HRA for the same house.
Regards,
Pranab Chakraborty
[Phone Number Removed For Privacy Reasons]
From India, Mumbai
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Regards,
Pranab Chakraborty
[Phone Number Removed For Privacy Reasons]
From India, Mumbai
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One more interesting point about HRA payment is that if a company provides quarters for both employees working in the same organization, HRA cannot be paid for the dependent spouse. However, if they stay outside the company-provided quarters, HRA will be paid for both.
Thank you.
From India, Visakhapatnam
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Thank you.
From India, Visakhapatnam
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This thread is interesting, but I feel that the gist of employment is missing. The terms of employment of one organization are different from another. Each employee should be treated individually rather than based on their marital status.
If the terms of employment describe that an employee is eligible for HRA, whether their spouse is claiming it or not should not be an issue. Under the IT tax, both individuals are considered as separate entities rather than being assessed based on marital status.
In cases like this, every organization should view the employee in line with how income tax rules are framed.
From India, Mumbai
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If the terms of employment describe that an employee is eligible for HRA, whether their spouse is claiming it or not should not be an issue. Under the IT tax, both individuals are considered as separate entities rather than being assessed based on marital status.
In cases like this, every organization should view the employee in line with how income tax rules are framed.
From India, Mumbai
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Opinions of learned members are welcome on all the matters discussed in the forum. It's obvious everyone could express what they think or view as right; maybe the same could be really correct or may not be correct, as everybody is not an expert in all the areas discussed here. In other words, it should be treated as 'Opinions' only. At the same time, it's up to the viewers to choose and accept what they think is the correct one. I also appeal to all my friends that these opinions at best should be treated as a suggestion, and it is the responsibility of the concerned to ensure what is correct among these and how to act upon.
Re: HRA
I feel we shouldn't mix with the provisions of IT. It is a known fact that IT laws don't prescribe how much should be given as HRA or, for that matter, any part of one's emoluments. It's the prerogative of an employer to fix the emoluments of their employees. It's also not expected of them to determine how and how much spouses of their employees are paid, except in cases where fraudulent claims are made, like LTA, medical expenses, etc. IT law only insists that earnings should be disclosed, and tax due should be remitted appropriately. I don't think or come across any employer putting a precondition for granting HRA that a spouse also shouldn't receive HRA. Therefore, I feel an investigation into this type of HRA is unwelcome.
From India, Bangalore
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Re: HRA
I feel we shouldn't mix with the provisions of IT. It is a known fact that IT laws don't prescribe how much should be given as HRA or, for that matter, any part of one's emoluments. It's the prerogative of an employer to fix the emoluments of their employees. It's also not expected of them to determine how and how much spouses of their employees are paid, except in cases where fraudulent claims are made, like LTA, medical expenses, etc. IT law only insists that earnings should be disclosed, and tax due should be remitted appropriately. I don't think or come across any employer putting a precondition for granting HRA that a spouse also shouldn't receive HRA. Therefore, I feel an investigation into this type of HRA is unwelcome.
From India, Bangalore
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Salary at Source Deduction for Rent Paid Benefit
Regarding the Salary at Source Deduction for Rent Paid benefit, if an employee produces the Rent Receipt and Rent Agreement, an additional undertaking must be obtained if the agreement is in joint names, i.e., husband and wife. This undertaking should confirm that the benefit is being claimed by the employee and not by their spouse. Both the employee and their spouse should sign this undertaking to ensure the employer's compliance. The Rent Paid benefit can then be provided according to IT Rules.
If both husband and wife are claiming the benefit based on a single agreement, the responsibility lies with the Assessing ITO during assessment; it is not the employer's concern. Only the undertaking from the employee should be kept on record.
Regards,
Ramakant
From India, Pune
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Regarding the Salary at Source Deduction for Rent Paid benefit, if an employee produces the Rent Receipt and Rent Agreement, an additional undertaking must be obtained if the agreement is in joint names, i.e., husband and wife. This undertaking should confirm that the benefit is being claimed by the employee and not by their spouse. Both the employee and their spouse should sign this undertaking to ensure the employer's compliance. The Rent Paid benefit can then be provided according to IT Rules.
If both husband and wife are claiming the benefit based on a single agreement, the responsibility lies with the Assessing ITO during assessment; it is not the employer's concern. Only the undertaking from the employee should be kept on record.
Regards,
Ramakant
From India, Pune
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In my opinion, you have raised this query in respect to claims made by the employee and his spouse in the context of Income Tax exemption for the financial year 2013-14. If the question is understood from that perspective, I feel you can take the original rent receipt from your employee and consider the exemption. At this juncture, the finer aspect pointed out by Mr. Pranab needs to be taken care of. The rent receipt with the PAN number and a copy of the house owner, if the rental value is above 1 lakh, can be retained by you as your record.
If the spouse of the employee is claiming HRA from her organization over which you have no control, it may not be a matter of concern for your company. If both of them claim from their respective employers and it comes to the notice of IT authorities, then the employee will be questioned and not your organization because, as a tax deducting authority, you have verified the genuineness of the claims made by your employee by obtaining the original rent receipt from the claimant.
I request you to clarify whether you raised the query in respect to IT provisions.
Regards
From India, Madras
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If the spouse of the employee is claiming HRA from her organization over which you have no control, it may not be a matter of concern for your company. If both of them claim from their respective employers and it comes to the notice of IT authorities, then the employee will be questioned and not your organization because, as a tax deducting authority, you have verified the genuineness of the claims made by your employee by obtaining the original rent receipt from the claimant.
I request you to clarify whether you raised the query in respect to IT provisions.
Regards
From India, Madras
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Let me share my views on this thread as follows:
Analysis of Wage Structure Components
First and foremost, we shall analyze why the wage or salary of the working classes is structured into different components such as basic and other allowances. To my mind, the basic is the actual monetary consideration for the services rendered by an employee to the employer. Other allowances might have originated as compensation for specific or special needs arising out of employment to facilitate the discharge of duties comfortably. These allowances might have become conventional, benefiting both the employer and the employee; the employer benefits from lesser contributions in terms of indirect commitments such as contributions to schemes like Provident Fund, Pension, and Gratuity, while the employee benefits from the overall increase in their pay package. It automatically follows that the grant of allowances to wage earners or salaried people is subject to the existence of certain specific or special conditions associated with the employment, which forms the basis for their grant. However, certain allowances like dearness allowance, which was necessitated by the phenomenal rise in prices of commodities during World War II, continue to remain forever as an essential component of the wage or salary structure of employees.
Treatment of HRA
Second, apart from the TaxMan's point of view, how HRA is to be treated depends upon, as rightly pointed out by Loginmiracle, the HRA policy of the organization. There is no need for HRA if the employee is to occupy the rent-free accommodation provided by the employer within the precincts of the place of employment. If HRA is granted as a component of the total pay package, the question of the employed spouse, whether in the same organization or elsewhere, getting HRA has no relevance, I think.
Regards.
From India, Salem
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Analysis of Wage Structure Components
First and foremost, we shall analyze why the wage or salary of the working classes is structured into different components such as basic and other allowances. To my mind, the basic is the actual monetary consideration for the services rendered by an employee to the employer. Other allowances might have originated as compensation for specific or special needs arising out of employment to facilitate the discharge of duties comfortably. These allowances might have become conventional, benefiting both the employer and the employee; the employer benefits from lesser contributions in terms of indirect commitments such as contributions to schemes like Provident Fund, Pension, and Gratuity, while the employee benefits from the overall increase in their pay package. It automatically follows that the grant of allowances to wage earners or salaried people is subject to the existence of certain specific or special conditions associated with the employment, which forms the basis for their grant. However, certain allowances like dearness allowance, which was necessitated by the phenomenal rise in prices of commodities during World War II, continue to remain forever as an essential component of the wage or salary structure of employees.
Treatment of HRA
Second, apart from the TaxMan's point of view, how HRA is to be treated depends upon, as rightly pointed out by Loginmiracle, the HRA policy of the organization. There is no need for HRA if the employee is to occupy the rent-free accommodation provided by the employer within the precincts of the place of employment. If HRA is granted as a component of the total pay package, the question of the employed spouse, whether in the same organization or elsewhere, getting HRA has no relevance, I think.
Regards.
From India, Salem
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Let me share my views on this thread as follows:
Understanding Wage and Salary Components
First and foremost, we shall analyze why the wage or salary of the working classes is structured into different components such as basic and other allowances. To my mind, the basic is the actual monetary consideration for the services rendered by an employee to the employer, and other allowances might have originated in the form of compensation in view of the specific or special needs arising out of employment in order to facilitate the discharge of duties comfortably. However, they might have become conventional, benefiting both the employer and the employee; the employer gains the benefit of lesser contribution in terms of indirect commitments such as contributions to schemes of provident fund, pension, gratuity, and the like, and the employee sees an overall increase in his pay package. It automatically follows that the grant of allowances to wage earners or salaried people is subject to the existence of certain specific or special conditions associated with employment, which forms the basis for its grant. However, certain allowances like dearness allowance, which was necessitated by the phenomenal rise in prices of commodities during World War II, continue to remain forever as an essential component of the wage or salary structure of employees.
Housing Rent Allowance (HRA) Considerations
Second, apart from the taxman's point of view, how HRA is to be treated depends upon, as rightly pointed out by loginmiracle, the HRA policy of the organization. There is no need for HRA if the employee is to occupy the rent-free accommodation provided by the employer within the precincts of the place of employment. If HRA is granted as a grand component of the total pay package, the question of the employed spouse, whether in the same organization or elsewhere, receiving HRA has no relevance, I think.
Happy sir, you have provided an elaborate history of the origin of allowances. Such background information on labor laws is necessary. As an experienced person, only you can provide such information. The purpose of the thread is fulfilled by such experienced people. Merely clicking the appreciation button is not sufficient. Hence, I request you once again to continue to participate daily in one or other threads.
Regards.
From India, Visakhapatnam
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Understanding Wage and Salary Components
First and foremost, we shall analyze why the wage or salary of the working classes is structured into different components such as basic and other allowances. To my mind, the basic is the actual monetary consideration for the services rendered by an employee to the employer, and other allowances might have originated in the form of compensation in view of the specific or special needs arising out of employment in order to facilitate the discharge of duties comfortably. However, they might have become conventional, benefiting both the employer and the employee; the employer gains the benefit of lesser contribution in terms of indirect commitments such as contributions to schemes of provident fund, pension, gratuity, and the like, and the employee sees an overall increase in his pay package. It automatically follows that the grant of allowances to wage earners or salaried people is subject to the existence of certain specific or special conditions associated with employment, which forms the basis for its grant. However, certain allowances like dearness allowance, which was necessitated by the phenomenal rise in prices of commodities during World War II, continue to remain forever as an essential component of the wage or salary structure of employees.
Housing Rent Allowance (HRA) Considerations
Second, apart from the taxman's point of view, how HRA is to be treated depends upon, as rightly pointed out by loginmiracle, the HRA policy of the organization. There is no need for HRA if the employee is to occupy the rent-free accommodation provided by the employer within the precincts of the place of employment. If HRA is granted as a grand component of the total pay package, the question of the employed spouse, whether in the same organization or elsewhere, receiving HRA has no relevance, I think.
Happy sir, you have provided an elaborate history of the origin of allowances. Such background information on labor laws is necessary. As an experienced person, only you can provide such information. The purpose of the thread is fulfilled by such experienced people. Merely clicking the appreciation button is not sufficient. Hence, I request you once again to continue to participate daily in one or other threads.
Regards.
From India, Visakhapatnam
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