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Hra exemption

samson (Accountant) (55 Points)

27 February 2013

Hi,

Please tell me, if company is not paying any HRA to its employee and employee is paying Rent. Can he eligible for 10(13A) ?. If yes please help me to calculate the HRA

Basic : 40000 (pm)

Rent paid by him : 7000 (Loc :Chennai)

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SS HALCYON (CHARTERED ACCOUNTANT) (42 Points)
Replied 27 February 2013

A person who is not receiving HRA he can't claim HRA exemption but Still he can get Deductions under section 80GG so please read the conditions to be full fill under sec 80GG.

1. Section 80GG provides for grant of a deduction in respect of any expenditure incurred by an assessee in excess of 10 per cent of his total income towards payment of rent (by whatever name called), to the extent to which such excess expenditure does not exceed Rs. 300 p.m. or 15 per cent of the total income of the assessee for the year¹, whichever is less and subject to such other conditions as may be prescribed. Rule 11B of the Income-tax Rules prescribes the places in the country where the accommodation should be situated.

2. Two important conditions which should be satisfied before an assessee is entitled to deduction under section 80GG are :

a. the assessee should not be in receipt of any house rent allowance which may be entitled to exemption under section 10(13A); and

b. the assessee or his spouse or minor child or where the assessee is a member of a HUF, the HUF itself should not own any residential accommodation whatsoever.

3. The Explanation to section 80GG provides that the term ‘total income’ should be taken to represent the assessee’s total income before allowing deduction for any expenditure under section 80GG itself.

4. The Board has been receiving a large number of references on the true meaning of the Explanation. In order to arrive at the base of the total income with reference to which the amount of admissible deduction is to be calculated, it is clarified that the total income would be the total income of the assessee after allowing all deductions except the one provided under section 80GG itself. To illustrate, if an assessee is a salaried employee, the total income for the purposes of section 80GG will be arrived at after allowing the standard deduction under section 16(i) and the deduction under section 80G, etc.

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Harish (CA Student) (568 Points)
Replied 27 February 2013

When company itself is not paying any HRA then no Exemption u/s 10(13A) can be claimed. But however employee can claim deduction u/s 80GG. Deduction calculation as follows:

The amount allowed as deduction is the minimum of the following:

Rent / lease amount paid less 10% of your total income
Rs. 2,000 per month
25% of your total income

Here, Total Income means:

Your Gross Total Income

Less long term capital gain, and short term capital gain u/s 111A

Less all deductions under Chapter VIA except Section 80GG.

1 Like

samson (Accountant) (55 Points)
Replied 27 February 2013

Dear SS Halcyon & Harish,

Thank you sir.

@VaibhavJ (Believe!! Live your dreams!) (33511 Points)
Replied 27 February 2013

Originally posted by : Harish
	When company itself is not paying any HRA then no Exemption u/s 10(13A) can be claimed. But however employee can claim deduction u/s 80GG. Deduction calculation as follows: The amount allowed as deduction is the minimum of the following: Rent / lease amount paid less 10% of your total income Rs. 2,000 per month 25% of your total income Here, Total Income means: Your Gross Total Income Less long term capital gain, and short term capital gain u/s 111A Less all deductions under Chapter VIA except Section 80GG.