LIVE GST Certification Course by CA Arun Chhajer begins 21st April. Register Now!!

Rent paid deduction against salary

hardik (NA) (70 Points)

09 January 2014

A person for example Ravi is working on a salary basis at an enterprise. TDS is been deducted from his salary.

Ravi pays rent to his father due to family problems. Can he use this rent as a deduction? And whats the limit till he can use the deduction?

Plz reply cause i am confused with this concept. Thxs

Reply
Follow
Share

3 Replies

Nitesh Matta (Nothing) (198 Points)
Replied 09 January 2014

Well.. if he lives in the house of the father and his father lives in some other house and he doest have his own house I think then these are valid points for paying the rent and get rent deduction eligibility..

Shyam C.Pujara (Student (C.A Final)) (177 Points)
Replied 09 January 2014

Hi Hardik,

If he recives HRA he can get exemption in following way

LEAST of the following shall be exempted

1) Actual HRA received

2) 40% or 50% of Basic salary depending upon city od residence

3) Rent paid less 10% salary

For example, assume one earns a basic salary of Rs 20,000 per month and rents a flat in Mumbai for Rs 5,000 per month. His actual HRA is Rs 8,000. He is eligible for 50 or 40 percent of the basic pay for HRA exemption.

Least of:

1 )Actual HRA received – Rs 8,000

2) 50 percent of basic salary – Rs 10,000

3) Excess of rent paid over 10 percent of salary, i.e., Rs 5,000 less Rs 2,000 – Rs 3,000.

As such, Rs 3,000 per month is the least and will be the exemption allowable for HRA deduction.

But if he doesnt receive HRA he will not be able to claim any exemptions.

Another way is to claim deduction u/s 80GG here he can calim deduction as under

LEAST of following shall b allowed as deduction

1) Rs. 2000/- Pm.

2) 25% of the total income (after allowing all deductions except under this section).

3) Expenditure incurred in excess of 10% of the total income (after allowing all deductions except under this section).

1 Like

@*CS Siddharth Bumb. * (B.Com, CA Final, CS ) (5270 Points)
Replied 09 January 2014

Originally posted by : Shyam C.Pujara
	Hi Hardik, If he recives HRA he can get exemption in following way LEAST of the following shall be exempted 1) Actual HRA received 2) 40% or 50% of Basic salary depending upon city od residence 3) Rent paid less 10% salary For example, assume one earns a basic salary of Rs 20,000 per month and rents a flat in Mumbai for Rs 5,000 per month. His actual HRA is Rs 8,000. He is eligible for 50 or 40 percent of the basic pay for HRA exemption. Least of: Actual HRA received – Rs 8,000 50 percent of basic salary – Rs 10,000 Excess of rent paid over 10 percent of salary, i.e., Rs 5,000 less Rs 2,000 – Rs 3,000. As such, Rs 3,000 per month is the least and will be the exemption allowable for HRA deduction. But if he doesnt receive HRA he will not be able to claim any exemptions.