Ensure that you create a rental agreement

When renting a relative's property, having a rent agreement is essential to claim house rent allowance (HRA). Failing to do so may result in losing HRA deductions, leading to potential taxation on the amount.

Transfer  digitally or request a checkbook 

When renting a house, always transfer rent to the landlord's bank account. Avoid cash payments. For cash payments exceeding Rs 5000, use revenue stamps on receipts.

Obtain a rent receipt

Always request a rent receipt when paying rent to your landlord, and have your employer prepare it. If the tax department investigates, they may require further evidence. Ensure that the rent receipt matches the rent agreement to claim deductions accurately.

Obtain PAN, if payment exceeds  Rs.1,00,000

It's essential to furnish your landlord's PAN to your employer when your annual payment exceeds Rs. 1 lakh, to fully benefit from HRA exemption and reduce your TDS deduction.

Landlord must give declaration in absence of Pan

Ensure your landlord is willing to provide a declaration if PAN is unavailable. If PAN is unavailable, obtain a 'Form 60' duly filled by your landlord and submit both documents to your employer.

No one get full deduction on HRA 

It is the lowest of the following three amount a) The HRA received, b) 50% of the HRA (or 40% if not in a metro city), c) Actual rent paid minus 10% of your basic salary, including dearness allowance.

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