Income tax returns: False HRA while filing ITR could cost you this much
False HRA claims can lead to penalties. Here’s how to claim HRA correctly during tax filing in order to maximize your tax savings
House Rent Allowance (HRA) is deducted by employers from salaries and can be seen in part B of Form 16 while you are filing an Income Tax Return (ITR). As per Section 10 (13 A), HRA exemption can only be claimed if one lives in a rented house. Those who are not receiving HRA like non-salaried individuals can claim a deduction for their rental expenses under Section 80GG. Taxpayers who reside in their own house are not eligible for the HRA exemption benefit.
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Claiming HRA correctly is a legal requirement as well as a valuable tax-saving tool for salaried taxpayers. Here’s how to claim HRA during tax filing in order to maximize your tax savings:
Exemption on HRA is calculated based on the least of the following:
Read more: ITR Return Filing: Should you file ITR if your income is less than ₹7 lakh?
- Actual HRA received
- 50% of salary (for those living in metro cities) or 40% of salary (for non-metro residents)
- Rent paid minus 10% of the salary.
What documents are required to claim HRA?
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- Rent Receipts with acknowledgments from the landlord with the landlord's PAN details in case rent exceeds ₹1 lakh annually
- Rental agreement
Penalties for false HRA claims
False HRA claims can lead to penalties. In case you underreported your income, a penalty of 50% of the tax is levied. A penalty of up to 3 times the amount of tax sought to be evaded can also be levied.
