Tax benefits for staying in rented house

I stay in a rented house. But I don not get any HRA in my salary. Can I still save some tax?


Even though HRA may not be part of the salary, you can claim the deduction under Section 80 (GG) of the Income Tax Act. Under Section 80 GG, the least of the following are considered as the HRA benefit:

Rent paid over and above 10% of the annual salary

25% if the adjusted total annual income (Income as per rules prescribed by I-T Department for this purpose)

5000 per month

If you live with your parents and you pay them rent, you still are eligible to claim the HRA. But your parents must furnish details of rent received at the time of filing your ITR.

However, there are certain things you must keep in mind.

It is a pre-condition to claim HRA that you should not live in your own property. But remember that your family members such as spouse or children should also not own the home or property you live in. Also, the person claiming the HRA must not earn rental income from an owned property anywhere.

Sometimes, you may forget to furnish rent receipts or relevant documents to your employer, you don’t have to panic. You can claim the HRA deduction at the time of filing the final Income Tax Return (ITR).

If you are living in a shared apartment, the share of rent payable by each individual should be clearly mentioned in the rental agreement. Based on that rental agreement, the HRA amount can be calculated.

Always try to keep the rental documents as a proof if you ever come under the scrutiny of the Income Tax Department. HRA deduction can reduce your tax liability significantly, provided you claim it the proper way.

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BB Expert