Your Queries: Can you get tax exemption on HRA based on actual rent paid?

Updated: March 10, 2020 8:57 AM

Any special allowance granted to a taxpayer by his employer to meet expenditure actually incurred on payment of rent for a house occupied by the taxpayer is exempt under Section 10(13A) subject to the prescribed limits.

Generally, tax exemption in the form of HRA is allowed to employees whether working in public or private sector. Generally, tax exemption in the form of HRA is allowed to employees whether working in public or private sector.

By Chirag Nangia

I am drawing Rs 46,000 as monthly HRA and paying rent of Rs 18,000. I am charged 30% tax on HRA and not able to claim any tax benefit for the rent I am paying. What is the rule position to claim HRA for central govt officers on deputation with PSUs?
—R S Ahuja

Any special allowance granted to a taxpayer by his employer to meet expenditure actually incurred on payment of rent for a house occupied by the taxpayer is exempt under Section 10(13A) subject to the prescribed limits. Generally, tax exemption in the form of HRA is allowed to employees whether working in public or private sector. While it appears that tax benefit in the form of HRA exemption shall be given to you, however, you may compute the amount of tax exemption yourself. The quantum of exemption shall be least of a) allowance actually received b) rent paid in excess of 10% of salary or c) 50% of salary (40% in case of non-metro cities).

I have a joint home loan with my wife. I understand that both husband and wife are entitled to income tax benefits on both components in case of joint home loan of up to Rs 4 lakh by both separately. Please guide me.
—Vikass Sridev

Assuming that you both are co-owners of the property and discharge the loan obligation, you and your wife both, shall be eligible to claim deduction under Section 24(b) in respect of the interest paid on housing loan. The total interest shall be allocated to each co-owner in the ratio of your ownership and each co-owner shall be entitled to claim maximum deduction of up to Rs 2 lakh. Both of you can claim tax deductions of a maximum of Rs 1.5 lakh, in accordance with Section 80C also on principal repayment of home loan.

Do I have to pay capital gains on selling shares before one year of investing. How do I calculate tax on it?
—Atul Kumar

Sale of listed/ unlisted equity shares before a period of 12 months, gives rise to short-term capital gains (STCG) and a taxpayer is required to compute the capital gains by deducting the cost of acquisition, from the sale consideration of the share. STCG from sale of equity shares is charged at 15% and STCG from sale of unlisted equity shares is taxable at the slab rates applicable to an individual.

The writer is director, Nangia Andersen Consulting. Send your queries to fepersonalfinance@expressindia.com

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