Can the benefit of House Rent Allowance available under the Income Tax Department be availed for more than one rented house? Recently a case came to light. In which the son is living in a rented house in one city and the parents live on rent in another city. In such a situation, the question arises whether HRA claim can be taken for both the rented houses?
Exemption is available in Income Tax Act
Rules regarding HRA have been made under Rule 2A of the Income Tax Act. According to which the employee should be given rent allowance by the employer. In this, exemption is available only in respect of the rent of the house taken on rent for the residence of the employee. Which means that the employee can get exemption only for the place where he lives.
There will be no discount on two rented houses
Where any employee himself lives on rent. He can take discount for that. If parents live on rent in another city, no separate exemption can be claimed for them. Even if the employee pays the rent for the parents. Even in a house where an employee lives on rent, only a maximum amount of fifty percent of his basic salary can be claimed.
Let us assume that your basic salary is fifty thousand rupees. In which he gets twenty thousand rupees as HRA. You pay thirty thousand rupees as rent every month. In such a situation, you will get HRA exemption of Rs 20 thousand. This exemption is available from your taxable income only.
The lower your taxable income, the less tax you will have to pay. You should collect all the monthly rent receipts and other necessary documents to avail HRA.