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The tax laws also allow you to claim the rent paid as exempt allowance, in case you are in receipt of any HRA (House Rent Allowance), subject to the fulfilment of certain conditions and up to certain limits. For claiming HRA exemption, you need to be actually paying rent for the residential accommodation occupied by you.
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How to claim tax exemption on rent paid on house?
House rent receipts have to be submitted to the employer to claim the exemption. If you claim tax deduction for the interest paid on a housing loan, you are not eligible for HRA exemption. Interest up to Rs 1.5 lakh in a year paid on a housing loan is deductible from the taxable income of the individual under Section 24 (b) of the Income Tax Act.
Are there any tax benefits on house rent paid?
Income tax benefits on house rent. The tax benefits on rent paid differs, depending on whether you are a salaried person who receives HRA from the employer, or if you pay rent but do not receive HRA. To meet the high costs of living in rented accommodations, employers pay house rent allowance (HRA) to their employees.
Is there any tax exemption for rent paid to spouse (wife)?
HRA tax exemption for rent paid to the spouse (wife) of the assessee is allowed by the Ahemdabad Bench of the Income Tax Appellate Tribunal in the case of Bajrang Prasad Ramdharani Vs. ACIT in ITA No. 715/Ahd/2013 and held that the house owned by the wife of the assessee is occupied by the assessee and has paid the rent through bank transfers.
What is the tax deduction for rent paid to employees?
The employer gets full deduction, with respect to rent paid to the employee. The employee too gets the HRA as tax-exempt, while claiming 30% flat deduction on such rent received by him for his own property, thereby, effectively reducing the tax liability.