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Hra claim & electricity perq

Bhawana Kedia (Fresher) (26 Points)

02 July 2015

Dear Experts,

Can a company provide an employee as a part of his/her salary both HRA and Electricity Perq? And is the employee eligible to claim exemption for both?

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7 Replies

J. K. Ratan (Compliance Advisor) (794 Points)
Replied 02 July 2015

Dear Ma'am

There is no any statutory Restrictions on providing such a perks. It's Highly depend on companies internal policies.

But Receiving Electricity as perk will not effect your tax liability. It's fully taxable in your hand.

You could obtain deductions only for HRA

- 40% or 50% of SAS as the case may be

- Actual HRA Received

- Rent Paid

whichever lower is allowed as a deduction.

CMA Poornima Madhava (CMA) (13097 Points)
Replied 02 July 2015

As said by Jay, electricity is taxable as perk.

HRA exemption is possible as per 10(13A): Least of the following is exempt:

40% or 50% of salary (depending on the location)
HRA received
Excess rent paid over 10% of salary (not just rent paid)

karan jit singh (Consultant) (1299 Points)
Replied 02 July 2015

Only HRA is exempt if rent is paid considering the limits. Bur no impact of electric allowance

AMEET KIMBAHUNE (Consultant) (87 Points)
Replied 03 July 2015

I agree with the above views. While electricity allowance would be taxable, the HRA exemption could be claimed u/s.10(13A)

Bhawana Kedia (Fresher) (26 Points)
Replied 03 July 2015

Thank you for your replies.

But as per rule 3(4), if the employee pays for the electricity the amount shall be deducted from the value of perqs and shall not be taxable under the head salaries. So, can an employee claim this perq as well as claim HRA?

CMA Poornima Madhava (CMA) (13097 Points)
Replied 03 July 2015

Yeah..the balance amount is only taxable as perk after deducting the amount paid by the employee. HRA deduction is independent of perk for electricity. So it can be claimed as deduction.

Bhawana Kedia (Fresher) (26 Points)
Replied 04 July 2015

Dear Poornima,

Thank you for that clarification. If this is so, then why does none of the Companies provide both the HRA claim and the electricity perq together, if that is in the interest of the employee. Does it have a negative impact on the taxable income of the company/organization?