A house rent receipt acts as a documentary record of your rent payment. A proof that the tenant has paid the rent, the rent receipt is provided by the landlord after collecting the rent. Rent receipt for income tax helps you claim tax benefits. The rent receipt will also act as a legal proof of the rent payment in case of a dispute between the two parties.
Why do you need rent receipts?
To claim house rent allowance (HRA), the HR department in your office will ask you to submit house rent receipts to your employer before the end of the financial year. Rent receipt for income tax deductions is important. Since most transactions take place online these days, you might be paying your rent through credit card or other online money transfer channels. In any case, you have to collect rent receipts from your landlord to claim HRA deductions.
Components of rent receipt
Rents receipts must carry the details as under:
- -Name of the tenant
- -Name of the landlord
- -Address of the property
- -Rent amount
- -Rent period
- -Medium of payment (cash, cheque, online payment)
- -Signature of tenant
- -Signature of landlord
- -Revenue stamp*
- -PAN of landlord**
Tax benefits
Income tax provisions under which HRA could be claimed- Those living in rented accommodations can avail of HRA exemption to save tax under Section 10 (13A) of the Income-Tax Act, if they are salaried individuals. Self-employed professionals are offered HRA tax deduction under Section 80GG of the law.
Extent of tax benefit- Rule 2A of Income-Tax Act, 1962, prescribes the limits up to which you can claim HRA benefits. The limit is the least of the following amounts:
*The amount of HRA actually received
*The amount of rent paid over 10% of your salary
*50% of your salary, in case the accommodation is in four metro cities; 40% of your salary if the rented accommodation in any other city
FAQs
Why do I need to get a receipt from my landlord?
Your employer needs a proof of rent payment to allow exemption on HRA. The employer is required to collect proofs from you before allowing any exemptions & deductions. This is your employer’s responsibility as per the income tax act.
Why does my company ask me to submit rent receipt proofs?
o allow you exemption on HRA, it is mandatory for the employer to collect proof of rent payment. The employer will give you exemption on HRA based on these rent receipts. Your final tax liability will be calculated accordingly. Your TDS shall be adjusted so you don’t have to pay tax on HRA.