Monthly Submission | HRA Meaning | Key Points | Documents | Elements Of Receipts | Where To Submit | FAQ
You must have heard of rent receipts as it is one of the most important documents especially when you are looking to get an income tax refund. So, it is important that you collect this receipt as it serves an important purpose at hand.
Here, we are going to tell you why you need rent receipts, the purpose they serve, and the importance they have. Each of these details is crucial as it helps in fetching some important knowledge and can be instrumental in allowing you to get good refunds on the tax paid.
Rent receipts are offered by the landlord when rent is paid and they can also be used for legal matters as it is proof that you have been paying rent.
You will need the rent receipts when you are looking to claim your house rental allowance if it is a part of your salary slip. So, by the end of the financial year, you need to be sure that you have submitted the rent receipts for all the month.
If the value of rent paid exceeds Rs. 1 lakh in a year, you will also need to submit the PAN details of the landlord to the employer too.
Do You Need To Submit The Rent Receipts Monthly?
No there is no obligation to submit the rent receipts every month but by the end of the financial year, you need to be sure that you have duly submitted the receipts for all the months. You can choose to submit them either quarterly or on a half-yearly basis too. It is upon you to choose the right frequency.
What Do You Mean By HRA?
HRA stands for house rental allowance and usually, people have one of their salary components as the HRA. This component is offered by the employer to his employee in exchange for accommodation purposes.
This refund will only be given if the employee lives in a rented home and doesn’t own the place where he/she lives.
The Key Points
Here are some of the key points you need to keep in mind when you are looking to work with the rent receipts.
- It is compulsory for you to submit the rent receipts for all the months of a year
- If the rent is more than Rs. 5,000 every month and you are paying in cash, you will need to fix a revenue stamp on the receipt. If you are paying by cheque, a stamp will not be needed.
- If the rent amount paid is in excess of Rs. 1 lakh in a year, you will need to submit the PAN card of the landlord for claiming the refund.
- If you fail to submit the PAN or a clear application stating why you didn’t give it, you will fail to get the HRA and your employer will deduct the TDS. This will incur a loss in the end for the employee.
The Key Documents
When you want to claim the HRA, here are some of the important documents you need to have.
- Duly filled in rent receipt with all details listed
- The rent agreement at the end of the financial year
- Pan card of the landlord if the rent paid is in excess of 1 lakh every year
So, when you have all these documents handy with you, it will help you make the right submission and this in turn will allow you to get the right exemption and thereby save money in taxes.
Why Do You Need The Rent Receipts?
Some of you may be wondering why is the rent receipt such an important document and why you need it in the first place.
It is mostly needed by salaried employees because a part of their salary component is the housing terms. A part of the salary is paid for accommodation expenses.
This is why the employer will pay a part of the salary and reimburse the amount at the end of the financial year based on the details. If you want to avail of these refunds, you will need to be sure that you are submitting your rent receipts.
This is why the receipts hold importance mainly for salaried people only as it is the means to seek house rental allowance. If you are unable to procure it, you will ultimately end up losing this allowance.
The Key Elements Of A Rent Receipt
When you are making a receipt, it is important that it contains the important particulars. Simply putting in some arbitrary information doesn’t make it a valid receipt. You have to ensure that it contains the right information.
Here are the details that should be a part of the receipt.
- The payment date
- The period for which you are renting the house
- Name of the landlord
- Name of the tenant
- The signature of the landlord and the tenant
- The address of the house for which rent is being paid
- The revenue stamp if you are paying the rent in cash and the amount in excess of Rs. 5000
- The PAN number of the landlord if the annual rent exceeds 1 lakh
So, these are the important parts of the receipt. You have to be sure that these details are encompassed in it or else your receipt will not be considered valid.
Is The Rent Receipt A Mandatory Document?
If you are looking to claim HRA, there is no way you can do it without the presence of the rent receipt. The receipt is the absolute most document that you need to show when you are looking to get the allowances for house rent.
Even if you are not claiming HRA but you are staying on rent, it is always advisable to collect the receipts as these are legal proof of the rent amount that you are paying. You never know when you may end up needing it.
So, it is always considered good practice to keep the rent receipts with yourself.
Where Do You Need To Submit The Rent Receipts?
As per the Income Tax Rule of India, all employers who disburse salary need to deduct a tax at source. This needs to be deposited to the government. They then need to pay the balance amount to their employee.
If employees have any tax-saving investment, then the employer needs to consider that. They will give the employee the benefit of a sound tax-saving investment. Post that, they deduct the tax on the net amount that is left.
As a means to claim the benefits of rent, a lot of employees gave fake rent receipts. This is why the HR department had to intervene. The employees now need to submit their rental agreements too. The rental agreement is a legal document that is binding by law. It lists the terms and clauses of the rent.
It is the duty of the HR department to check the rental agreement and then approve the HRA that the employee is going to get. This makes the allowances valid and legit.
Also, learn about rental income tax.
Can I claim HRA if I own a house?
If the house you are living in belongs to you, you won’t claim the HRA. If you own a house but stay in a rented home, you can still claim the HRA upon submission of all the necessary documents.
Can I claim HRA and a home loan simultaneously?
If you live in a rented house and choose to buy a house by seeking a home loan, you have the provision to claim the tax benefits for both. This is easy if both these houses are in different cities however if your purchased house and rented house are in the same city, you need to give a valid explanation as to why you are not staying in the house you own.
Can both husband and wife claim HRA?
Yes, if both are paying rent, both of them can claim the HRA. However, it is best if your landlord agrees to issue two rent receipts or divides the rent in proportion between the two of you.
Can you claim HRA for paying rent for two houses?
You can only do so if you are paying rent for two houses but you stay in both of them at different times of the year.