Most of the salaried individuals have house rent allowance as a part of their salary structure. They can claim tax exemption for part of house rent allowance under Section 10 (13A) of the Income Tax Act, 1961. By doing so, employees can save taxes. However, it is important to remember that the tax exemption on house rent allowance is not applicable in case you opt for a new tax regime.
If you have to avail of the tax benefit on House Rent Allowance (HRA), you need to submit rent receipts for the financial year along with the rental agreement to your employer as part of income tax documents. You are also required to provide the PAN number of your landlord in case the rent amount for the year exceeds INR 1 lakh. You can provide rent receipts on a monthly, quarterly, half-yearly, or on annual basis.
What are rent receipts and their uses?
A rent receipt is a documentary record of rent payment transactions to your landlord. Your landlord will provide the rent receipt upon collecting the rent, which can be used for tax and legal purposes. Following are the important elements of rent receipt:
- Date of rent payment
- Rental period
- Landlord name
- Your name as a tenant
- Address of the rented house
- PAN number of your landlord (if the annual rent exceeds INR 1 lakh)
- Signature of the landlord
- Revenue stamp (For cash payment of more than INR 5,000. Revenue stamp is not required for cheque payments)
Rent receipts can be used for the following purposes:
- You can use rent receipts as proof of your expenses to claim tax benefits. You can avoid the last-minute hassles by arranging it online. You can generate rent receipts using the free rent receipt generator available online.
- A rent receipt is also a legal document that endorses the payment made by you to your landlord for the rented house.
How to generate rent receipts?
House rent allowance that comes as a part of your job cost-to company (CTC) is also a tax avenue. In order to avail of the tax exemption benefit provided under Section 10(13A) of the Income Tax Act, 1961, you need to generate rent receipts get them signed by your landlord to submit them to the Human Resource Department of your employer. There is a free rent receipt generator that can help you generate rent receipts in no time. Here is a simple process to follow to generate rent receipt from ETMONEY’s free rent receipt generator:
Step 1: Log on to the ETmoney website
Step 2: Go to the ‘Rent receipt generator’ tab under the ‘tools and calculators’ section
Step 3: Fill in the required details such as basic details first
- Your full name
- Monthly rent amount
Step 4: Move on to the next section where you need to provide details of your rented property
- Name of your house owner
- House owner’s PAN number
- Address of the rented property
Step 5: Move on to fill the last section that requires the below information
- Start date of rent receipts
- End date of rent receipts
- Rent receipt format – monthly/quarterly
Step 6: Your rent receipt in the chosen format will be instantly generated in a PDF format. You can save the generated rent receipts and get them printed to take the landlord’s signature on those rent receipts.
Exempted amount of HRA is least of the below:
- The actual amount of HRA that you receive from your employer
- 40% of your salary (for a non-metro city) and 50% of your salary (for a metro city)
- Actual rent paid minus 10% of your salary (Basic + Dearness Allowance)
Use the free rent receipt generator tool which is simple to use for a smooth taxation process.