How to get an HRA tax exemption if you work from home? Advantage of HRA income tax for WFH

For employees, the rental allowance tax exemption (HRA) is a significant advantage. The HRA comes through a portion of the payroll and can be claimed through resident employees. 

But in fiscal 2020-21, there are some employees, mostly young people, who live far from the place where they rent and work from home with their parents. But now those same workers are baffled that if they can benefit from HRA even if they live with their parents while working from home, and if they can, how is that possible? The questions are briefly discussed within the article. But first, let us know who is responsible for the HRA and what the calculation method is.

Download Automatic Income Tax Revised Form 16 Part A&B and Part B for the F.Y.2021-22[This Excel Utility can prepare One by One Form 16 Part A&B and Part B]

Who gets HRA and what is the method of calculating it?

HRA is available to employees and provides a portion of the salary. Employees living in rent should be entitled to full or partial tax relief on the amount received from HRA. But workers living in rent are not exempt from the tax and workers are required to pay the full amount of the tax to HRA. one of the circumstances must be necessary to qualify for the HRA benefit.

 

You can take advantage of the HRA tax credit when an employee submits the rent. This shows that the HRA tax benefit cannot be used if the rent is not presented.

Download Automatic Income Tax Revised Form 16 Part B for theF.Y.2021-22 [This Excel Utility can prepare One by One Form 16 Part B]

 

Home rental allowance (HRA) calculation

The tax credit in lieu of HRA is available on the lesser of the following amounts:

• Real HRA received through an employee

• 50% of the salary (base + DA) for employees residing in metropolitan areas. And 40% base + DA for non-metropolitan employees.

• Real rent with furniture minus 10% of the salary (Base + DA)

Download Automatic Income Tax House Rent Exemption Calculator U/s 10(13A) in Excel

For employees who live with their parents while working from home, there is no HRA tax credit if they have not paid their rent. But this benefit must be claimed through the people who presented the rent to the parents. 

No HRA benefits unless the rent is registered

If someone has filed for rent with their guardians, they must appear as rental income on their tax return. Their lease must be implemented and presented as proof of payment.

The submission period is currently active for the fiscal year 2020-21, however, the latest extension is until December 31, 2021.

Download and prepare at a time 50 Employees Form 16 Part B for the F.Y.2021-22 in Excel

On March 02, 2022 by www.taxexcel.net

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 Section 24 of the Income Tax Act deals with the interest an individual pays on a home or property loan.

 The name of this particular section is 'Domestic Property Income'. The discounts available are the loan

 interest and the standard deduction. 

There are several sections in the income tax law for obtaining the tax deduction on specific investments and expenses. One of the investments under constant legal pressure is the purchase of the residential property. The government recognizes that housing is the most important requirement as well as ownership, and many investments in your first home are tax-deductible.

Download Automatic Income Tax Arrears Relief Calculator U/s89 (1) with Form 10 E from the F.Y.2000-01 to F.Y.2021-22(Updated Version)

An important section related to a home loan in Section 24, allows you to apply for an exemption on the interest you pay on a home loan. Another section, Section 80C, allows you to apply for capital redemption tax benefits.

 

Section 24 is titled "Home Ownership Income Exemption". Income from home applies in the following cases:

 

If you are sending out, the rent received will be considered part of your income;

If you have more than 1 home, the annual net worth of the home, not including the home you live in, will count as your income.

 

If you only have 1 house and you live in it, the income from home ownership will be considered nil. Any rental income and the annual value of additional housing are subject to tax deduction under section 24.

 

Section 24. exemption Below

 

Here are two types of Income-tax deductions U/s 24 of the Income Tax Act:

Standard exemption: this is an exemption allowed for each taxpayer, where the amount equal to 30% of the net annual value is not covered by the tax ceiling. This does not apply if you are only occupying your home.

 

Interest on the loan: If you take out a mortgage to buy, build, or renovate a home, any interest you pay on the actual loan amount will be deductible from your tax payments. This category has the following 2 sub-categories, out of 2 in total.

Download and prepare at a time 50 Employees Form 16 Part B for the F.Y.2021-22 as per new and old tax regime.

 

If you take out a loan for a self-occupied property, you will have to pay  Rs. Discounts can be requested up to. 2 lakh.

 

If you take out a loan to buy or build a property (not a renovation), you can still request interest before actually buying or finishing its construction. You can request the deduction on interest paid before the completion of the construction or purchase, in 5 equal instalments from the year in which you bought or completed the house.

 

If the home is borrowed for renovations or renovations, you will not be able to apply for the tax deduction until the renovation is complete.

 

To get this exemption, you need to calculate the amount of interest you owe to the bank or financial institution you borrowed from, rather than the actual payment. It doesn't matter if you actually pay the lender the amount: you can get a discount on the entire amount of annual interest.

 

Exceptions under Section 24.

 

If the house is not in your possession, you can request the deduction of the entire amount of interest due without any maximum limit.

 

If you do not occupy the house because you live in another city for work or business reasons and you live in any other property or rental property in the city where you are employed, you can get the tax deduction only on the payment of interest. Rs. Can claim. , 2 lakh.

 

There is no exception to any brokerage or commission for loan or tenant arrangements.

To request the maximum deduction on the loan interest amount, the home must be purchased or completed within 3 years of the loan being granted. If the construction or purchase is not completed within 3 years, you will only have to pay Rs. Can claim. 30,000 instead of 2 lakhs.

 

The loan you are taking out must have a certificate of interest.

 

Download and prepare at a time 50 Employees Form 16 Part A&B for the F.Y.2021-22 as per new and old tax regime.

On February 07, 2022 by www.taxexcel.net

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