Salaried taxpayers have a component of HRA in their salary structure which is a tax-free allowance allowed to employees. HRA means House Rent Allowance and is an allowance which is paid by the employer to an employee for meeting the cost of living in a rented house. If you live in a rented house, you can claim a tax deduction on the HRA that you receive from the employer under Section 10 (13A) read with Rule 2A of the Income Tax Rules. The maximum deduction for HRA that you can claim would be lower of the following –
- Actual HRA received from the employer
- Rent paid in excess of 10% of the basic salary + dearness allowance
- 50% (for metro cities) or 40% (for non-metro cities) of the basic salary + dearness allowance
If you are eligible for claiming a deduction for HRA, you would have to submit the proof of such deduction to your employer so that the employer can determine the amount of your tax liability and deduct TDS from your salary before crediting the salary to you. This is where a rent receipt is needed.
What is a Rent Receipt?
A rent receipt is proof of rent paid by the employee. It is a printed document which contains the details of the rent paid. The receipt is signed by the landlord, therefore, making it a valid proof of rent paid.
Details included in a Rent Receipt
A rent receipt includes the following details of rent –
- Name of the tenant (employee)
- Name of the landlord
- Signature of the landlord
- Amount of rent paid
- The month and year for which the rent has been paid
- The address of the house for which the rent has been paid
How to Generate Rent Receipt Online?
An employee can generate rent receipt online through various online calculators available in the market. The process to generate rent receipt online is simple and includes the following steps –
- You should enter in your name and the amount of rental income that you pay every month
- Name of the landlord, his/her PAN Card number and the address of the house property should then be entered in the rent receipt generator
- The period for which the receipt is needed should be specified
- The rent receipt could, then, be printed on paper. You would have to get the receipt signed by the landlord to make it valid for submission to the employer
Things to Keep in Mind
When you generate and print your rent receipt online, the following points should be kept in mind –
- The landlord’s PAN Card number is optional if the annual rent is below INR 1 lakh. However, if the annual rent exceeds INR 1 lakh, you would have to furnish the landlord’s PAN Card number to your employer
- If the landlord does not have a PAN Card and the annual rent exceeds INR 1 lakh, your landlord should submit a declaration and Form 60. You should, then, submit the declaration and Form 60 offered by the landlord to your employer
- You should have a rent agreement supporting the rent receipt
- If the rental property is being shared with another individual (s), you should mention their share of the rent and their details in the rent agreement. The rent receipt would, however, reflect only your share of the rent paid
- Even if you stay in a rented house for a few months, you can claim HRA deduction for those months by submitting their corresponding rent receipts
- If your employer does not allow HRA exemption from your salary income, you can claim a deduction for rent paid under Section 80GG of the Income Tax Act, 1961.
So, if you are a salaried employee and live in a rented house, submit your rent receipts to claim HRA deductions from your salary income. You can generate rent receipts online making the process simpler, easier and quicker. So, use online receipt generators and lower your taxable income.