Choosing old tax regime can help you claim HRA exemption from taxes; here's how

Meant for the expenses regarding rented accommodation, House Rent Allowance (HRA) is also subjected to an exemption in the Income Tax Act that helps to reduce taxes partially or sometimes wholly. Those who live in rented places can claim an HRA exemption from taxes by utilising Section 80 GG, however, only if they choose the old tax regime. While House Rent Allowance is part of an employee's salary that might be subject to partial or full tax deductions under Section 10(13A) of the Income Tax Act, its calculation is influenced by several factors. Thereafter, if you are also among those, check this section to know more about HRA and its exemption from taxes under the old tax regime.Tax exemption under HRA The deduction is made on the basis of these factors:1. Actual HRA that the employee receives.2. 50% of the basic salary for those living in metro cities and 40% for those living in non-metros.3. Actual rent paid minus 10% of basic salary.Documents for claiming HRA tax exemption:In order to claim an HRA deduction, the employee will need to submit relevant documents like rental agreements and rent receipts to the employer. On the basis of this, he will be provided with an exemption for HRA in Form 16.Who can claim HRA deduction?Meanwhile, employees who don't receive HRA from their employers can also claim the deduction under section 80GG of the Income Tax Act on the basis of certain conditions.

• You must be self-employed or salaried.
• You must not have received HRA at any time in the year in which you are claiming the deduction.
• You/your spouse or your minor child should not own any residential accommodation at the place where you currently reside.

Those who live in their parents' house can also claim HRA."To claim HRA, you have to enter into a rental agreement with your parents and transfer money to them every month as rent. Your parents need to report the rent received from you as income in their income tax returns," said Archit Gupta, founder and chief executive officer of fintech company Clear.On the other hand, those who live in rented houses and have also applied for home loans are also eligible to claim HRA along with tax benefits. In this case, the employee needs to prove that the rented house and the house for which the loan has been sanctioned are both in separate places.Read all the Latest News, Trending News, Cricket News, Bollywood News,India News and Entertainment News here. Follow us on Facebook, Twitter and Instagram.