It is that time of the year when salaried individuals in India are required to submit a previously announced proof of investment in order to save on taxes. If you live on rent, the Home Rental Allowance (HRA) is part of your paycheck, for example, you’ll have to file Rent receipt As evidence of expenses, to claim the tax deductions allowed to the tenants under the Income Tax (IT) Act of India.
Under Section 80GG and Section 10(13A), you can claim less of the following in lieu of the home rent they pay:
- 5,000 rupees per month or 60,000 rupees per year
- 25% of the total income
- Pay the actual rent minus 10% of the gross income
However, to get this benefit, it is necessary to present the rental receipt. In this article, the various components of Rental receipts, also known as a home rent receipt. We will also discuss the generation process PDF rental receipt or Home rental receipt PDF.
What is a rental receipt?
Rent receipts serve as proof of the monthly rent you pay to your landlord. In most cases, you will have to ask the landlord to provide you with this Rent receipt Once you have paid.
Rent receipt coordination
This is the basic form of rental receipt.
Rent receipt form (filled in)
See also: know everything rent for rent
Rent receipt: why do you need it?
To allow you to be exempt from the house rent allowance that would normally be part of one’s salary package, your employer will have to collect proof of rent payment from you. This is where a Rent receipt turn comes. Rental receipts are documented proof that you have spent a certain amount of your salary, to defray living expenses in rented accommodation. Your final tax liability will be calculated, subject to your rental receipt. Your withholding tax will also be adjusted in such a way that you do not have to pay tax on the HRA.
See also: Learn all about tax rental income
Rent receipt and HRA account
Your employer will ask Rent receipt Each fiscal year, to calculate your tax liability and claim deductions on your behalf, if the HRA is part of your pay package. Your employer will require you to submit rental receipts before the end of the fiscal year. Even if you pay your rent through credit card or other online money transfer channels, you need to obtain rent receipts from the landlord and send them to your employer, to claim HRA deductions.
Read also about the importance Revenue stamp on rental receipt
The tenant will have to share the rent receipts with the employer to claim the HRA exemption, if he pays a monthly rent of more than Rs 3,000. In the event that the monthly rent is low, they do not need to provide receipts. It’s also pertinent to mention here that you don’t have to file a rental agreement to claim HRA benefits, because the tax code doesn’t specifically say so. However, the lease will not be valid, until the lease agreement is signed and executed between the landlord and the tenant.
See also: All you need to know about lease agreements
What if you don’t provide the rental receipt?
Since rent receipts are used as proof of payment, failure to file will result in a tax deduction from your paycheck.
Forged rental receipt
To save on taxes, renters sometimes resort to providing fake rent receipts. However, this can be a major problem, given that in recent years taxpayers have increased scrutiny of their income tax proofs. If fake rent receipts are submitted, the IT department may send a notice to obtain valid documents, initiate an inspection, or revoke the HRA exemption.
What is HRA?
HRA is the tax credit given to employees for what they pay for housing, each year. For the purpose of an HRA claim, your salary will only include the base salary and the cost-effectiveness allowance (DA) component.
HRA Claim Extent
Under Rule 2a of the Information Technology Act 1962, the HRA can be claimed as a minimum HRA received from the employer or 50% of salary for employees who live in the metro (40% elsewhere) or actual rent paid minus 10% of Salary.
An example of an HRA account
Suppose your basic salary is 30,000 rupees per month and you pay rent of 10,000 rupees per month in Mumbai. Your employer offers you an HRA of Rs 15,000 per month. The tax advantage will be:
* HRA = Rs 15,000
*Rent paid less than 10% of basic salary = Rs 10,000 – 3,000 = Rs 7,000
* 50% of the principal = Rs 15,000
Thus, the HRA will be Rs 7,000 and the remaining Rs 8,000 will be taxable.
See also: all about HRA account and HRA exemption. Also read how to claim a tax deduction under 80 grams Is HRA not part of your paycheck?
See also: Learn more about Income tax on the cooperative housing association
Who can claim an HRA?
You can claim deductions if you live in rented accommodation and the HRA is part of your paycheck. Those who live in rented housing can take advantage of the HRA’s tax-saving exemptions under Section 10(13A) of the IT Act, if they are salaried individuals. An HRA tax deduction is offered to self-employed professionals Section 80GG from the law.
See also: Income tax benefits on home rent
Components of a valid rental receipt
Rental receipts must include this information in order to be valid:
- Tenant’s name
- Lessor’s name
- The address of the property
- The amount of rent
- rental period
- Rental payment method (cash, check, online payment)
- The lessor’s signature
- Tenant’s signature
- Revenue stamp, if cash payment is more than Rs 5,000 per receipt.
- Landlord’s PAN details, if your annual rental amount is in excess of Rs 1 lakh or Rs 8,300 per month.
Rent receipt: period
Employers will ask you to apply Rent receipt in installments for three months.
Online rental receipt generators
Today, there are many virtual service providers such as housing edge The platform that helps you create files Online rental receipt No cost. All you have to do is visit these portals, provide the required information and generate free rental receipts online. In the next section, we will explain the step-by-step method by which you can create a rental receipt online.
Steps to issue a free rental receipt
using the internet Rental receipt generators On various platforms, tenants can generate receipts online for free by following these simple steps:
Step 1: Go to the desired platform. Click on the Rental Receipt Generator tab. The first page that appears will ask you to provide the name of the tenant and the amount of rent. Click the “Continue” button to continue.
Step 2: Now provide the landlord’s name, full address of the rental property, and details of the landlord’s personal account number (optional). Click the “Continue” button to continue.
Step 3: Fill in the period in which receipts must be generated. Click the “Continue” button to continue.
PDF rental receipt
The fourth step: The next page will give you a preview of the receipt. After making sure all the details in the preview are correct, you can hit the “Print” button to get copies of the rental receipts on the final screen. You can also download a file PDF rental receipt on your device.
Home Rent Receipt and HRA Benefits: Key Points to Consider
Property: You should not be the owner, whether sole proprietor or co-owner, of the property for which you pay rent and claim the Human Resources Department. This is why those who live in their parents’ homes are allowed to claim HRA benefits, as long as they pay their parents rent and the same is reflected in their outgoing pay.
Duration coverage: To calculate the extent of the exemption you can claim, only your salary for the period for which you paid rent will be considered. No HRA tax benefit can be claimed, if the rent paid does not exceed 10% of the salary for the relevant period.
Rental period: Submission of rent receipts for each month is not mandatory. This can be done on a quarterly, semi-annual or annual basis. However, receipts for all months claimed by HRA must be filed with your employer.
Rental payment status: You can pay rent through any means, including cash payments, as there are no specifications for rental payments yet. Simply collect the rental receipt from your landlord and present it to your business owner in electronic form or document, depending on the policy they follow.
See also: Can I claim an HRA for a different city?
Rent receipt with revenue stamp
Put the income stamp on the rental receipt
The tenant will have to put a revenue stamp on each rental receipt, if he pays more than Rs 5,000 per receipt. This requirement does not arise, if payment is made through cheque.
Owner’s PAN details
Apart from his PAN details, you may also have to provide a copy of the owner’s PAN card while submitting your returns. This becomes mandatory, only when the annual rental amount exceeds Rs 1 lakh and exceeds Rs 8,300 per month. In the event that you do not do so, you will not be able to claim with the Human Resources Department and the tax will be deducted accordingly.
In the event that you share the property with another tenant who also bears the rental expenses, the HRA deduction will be provided to you only to the extent of your share of the rent and not to the full amount.
Electronic copies or paper proof
While some employers also accept electronic copies of rent receipts, others may insist on physical receipts.
Any false information on the rental receipt will become null and void.
Direct HRA Claim
You can claim an HRA waiver directly with your IT department at the time your IT returns are filed, should your employer fail to do so.
See also: Everything you need to know about Model rental bill 2019
questions and answers
What evidence do I have to provide for a claim to the Human Resources Department?
Rental receipts, which state details including tenant/landlord details, property address, rent amount, payment schedule, signatures of the parties and the means of transaction, serve as evidence for claiming the HR department.
Do I have to provide rent receipts for each month to claim the Human Resources Department from the employer?
Rental receipts can be submitted on a quarterly, semi-annual or annual basis.
What if the owner does not have a PAN card?
In case the landlord does not have a PAN card and charges more than Rs 1 as annual rent, he will have to submit a written declaration, along with a duly filled Form 60. The tenant can then submit these documents to the employer, to claim HRA deductions.
Do I have to include rental receipts while filing an ITR?
Rent receipts must be presented to your employer to claim a home rent deduction.
What is the value of the income stamp used on the rental receipt?
The Re 1 revenue stamp is used on each rental receipt.
Is giving a PAN to the owner necessary?
These tenants only have to present the PAN to the landlord who pays a monthly rent of Rs 8333 or Rs 1 lakh per annum.