A comprehensive guide on HRA under Section 80GG of the Income Tax Act, including eligibility criteria, benefits, and how to calculate HRA online.
In India, the house rent allowance (HRA) is a significant component of the salary for most salaried individuals. However, not everyone is aware of the tax benefits that come with it. HRA under Section 80GG of the Income Tax Act, 1961 provides tax benefits for those who do not receive HRA as part of their salary but pay rent for their residence.
In this article, we will discuss the provisions of HRA and provisions of Section 80GG and how you can calculate your HRA online to claim tax benefits.
Eligibility Criteria For HRA under Section 80GG
To benefit from Section 80GG of the Income Tax Act, 1961, you must meet certain eligibility criteria. The following are the eligibility criteria for claiming HRA under Section 80GG:
- Not Receiving HRA: You must not be receiving HRA as part of your salary. If you are receiving HRA as part of your salary, you cannot claim HRA.
- Rent Payment: You must be paying rent for the residential accommodation occupied by you or your family.
- Gross Total Income: Your gross total income must not exceed Rs. 5 lakhs per financial year.
- No Own House: You must not own a residential house in the city where you reside or in the city where you are employed.
If you meet these eligibility criteria, you can claim HRA while filing your income tax returns. It is important to note that the amount of HRA exemption claimed under Section 80GG is subject to a maximum limit of Rs. 60,000 per financial year.
How to Calculate HRA Online?
Calculating House Rent Allowance (HRA) online is simple and straightforward. There are various online HRA calculators available on websites that can help you determine the amount of HRA exemption you are eligible for. Here’s how you can calculate HRA online:
- Visit an Online HRA Calculator: You can find several HRA calculators available on the internet. Simply search for ‘HRA calculator‘ on a search engine and select a reputable website.
- Enter Your Information: Once you are on the calculator website, you will be required to enter your total income, rent paid, and city of residence. This information is used to calculate the HRA exemption amount.
- Calculate HRA: The calculator will use the information you have provided to calculate the HRA exemption amount based on the provisions of Section 80GG of the Income Tax Act, 1961.
- Use the HRA Exemption Amount: You can use the HRA exemption amount calculated by the online calculator to claim the HRA exemption while filing your income tax returns.
It is important to note that the HRA exemption amount calculated by the online calculator is an estimate and may vary slightly from the actual HRA exemption amount. However, it provides a good starting point and can help you determine the amount of HRA exemption you are eligible for.
Benefits of Claiming HRA under Section 80GG
Claiming HRA under Section 80GG of the Income Tax Act, 1961 provides several benefits to taxpayers who do not receive HRA as part of their salary but pay rent for their residence. Some of the benefits of claiming HRA under Section 80GG are:
- Tax Savings: By claiming HRA , you can reduce your taxable income, leading to significant tax savings. This can result in a lower tax liability and increase your take-home pay.
- Easy to Claim: The process of claiming HRA is simple and straightforward. You can calculate HRA online and include it while filing income tax return. The process is hassle-free and can be completed quickly.
- No Limits: Unlike other tax exemptions, there is no limit on the amount of HRA exemption you can claim under Section 80GG. This means that you can claim the full amount of HRA that you are eligible for, leading to maximum tax savings.
- Flexibility: HRA exemption under Section 80GG is calculated based on the actual rent paid, making it a flexible option for taxpayers. Additionally, the exemption is based on the lower of the three amounts, providing taxpayers with more options to claim the HRA.
Claiming HRA under Section 80GG is a valuable tax benefit for individuals who do not receive HRA as part of their salary but pay rent for their residence. By claiming HRA under this section, you can reduce your taxable income, save on taxes, and increase your take-home pay.
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Conclusion
In conclusion, Section 80GG provides a valuable tax benefit for individuals who do not receive HRA as part of their salary but pay rent for their residence. By claiming HRA under this section, you can reduce your taxable income and save on taxes. The process of calculating HRA is simple and can be done online using various HRA calculators available on the internet. We hope this guide has provided you with useful information on how to calculate HRA online and claim the benefits under Section 80GG. To make it more accurate with the latest updates and guidance, connect with Vakilsearch now!
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