- Date : 02/09/2023
- Read: 3 mins
As per provisions of the Income Tax Act 1961 (Sections 10 – 13A), taxpayers can avail HRA Tax exemption on the rent paid to a spouse. Read on to know more about HRA Tax exemptions and save money this financial year!
Taxpayers avail tax exemptions to reduce their overall taxation. However, smart taxpayers also avail the HRA tax exemption on rent paid to spouse. Taxpayers should ensure that the ownership of the property belongs to the spouse, avoid making circular transactions, create a legally valid and proper rental agreement, and record the payments made while availing HRA tax exeptions.
Highlights:
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HRA Tax exemption can be claimed by taxpayers to reduce their overall taxation burden.
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Availing HRA Tax exemption can reduce the taxable income, resulting in a lower income tax slab.
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Taxpayers must ensure that they fulfil all the criteria laid down by the income tax department for HRA tax exemption to avoid legal issues.
What is HRA tax exemption which helps you reduce your overall taxation?
HRA tax exemption is an opportunity for salaried and self-employed taxpayers to reduce overall taxation as per their income tax slabs. Self-employed taxpayers can utilise the provisions of section 80GG, whereas salaried individuals can make use of Section 10 (13A) while filing their IT returns. Taxpayers can claim HRA tax exemption on rent paid to spouse. However, they need to ensure that certain conditions are fulfilled.
1. Ownership of property
The property must be entirely owned by the spouse. HRA Tax exemption cannot be claimed if a spouse has partial ownership of the property.
Also Read, Best Income Tax Saving Options for Salaried Women before ITR filing last date!
2. Rent agreement and payment
The taxpayer must create a valid rent agreement with the spouse and rent paid to the spouse must be recorded. The rent payment should keep as proof of the filing of taxes
3. Circular transactions
The rent paid to the spouse must not be circulated back to the taxpayer. The rent payment would be considered void and no HRA tax exemption can be claimed in such a case.
4. Taxation on rent received
The ITR of the spouse must be filed detailing the rent received. If the spouse is not working, they will fall below the income tax slab and no taxation will occur.
5. Independent income
It is advisable that the spouse should have an independent source of income to avoid inquiries from the Income tax department.
Also Read Lesser-known tax deduction techniques to save money before ITR filing last date!
Click here for the latest articles
Conclusion
HRA tax exemption is an opportunity for taxpayers to reduce their overall taxation as per the income tax slabs. However, the taxpayer must ensure that all requirements are fulfilled to avoid inquiries by the income tax department, which can lead to trouble later on.
Taxpayers avail tax exemptions to reduce their overall taxation. However, smart taxpayers also avail the HRA tax exemption on rent paid to spouse. Taxpayers should ensure that the ownership of the property belongs to the spouse, avoid making circular transactions, create a legally valid and proper rental agreement, and record the payments made while availing HRA tax exeptions.
Highlights:
-
HRA Tax exemption can be claimed by taxpayers to reduce their overall taxation burden.
-
Availing HRA Tax exemption can reduce the taxable income, resulting in a lower income tax slab.
-
Taxpayers must ensure that they fulfil all the criteria laid down by the income tax department for HRA tax exemption to avoid legal issues.
What is HRA tax exemption which helps you reduce your overall taxation?
HRA tax exemption is an opportunity for salaried and self-employed taxpayers to reduce overall taxation as per their income tax slabs. Self-employed taxpayers can utilise the provisions of section 80GG, whereas salaried individuals can make use of Section 10 (13A) while filing their IT returns. Taxpayers can claim HRA tax exemption on rent paid to spouse. However, they need to ensure that certain conditions are fulfilled.
1. Ownership of property
The property must be entirely owned by the spouse. HRA Tax exemption cannot be claimed if a spouse has partial ownership of the property.
Also Read, Best Income Tax Saving Options for Salaried Women before ITR filing last date!
2. Rent agreement and payment
The taxpayer must create a valid rent agreement with the spouse and rent paid to the spouse must be recorded. The rent payment should keep as proof of the filing of taxes
3. Circular transactions
The rent paid to the spouse must not be circulated back to the taxpayer. The rent payment would be considered void and no HRA tax exemption can be claimed in such a case.
4. Taxation on rent received
The ITR of the spouse must be filed detailing the rent received. If the spouse is not working, they will fall below the income tax slab and no taxation will occur.
5. Independent income
It is advisable that the spouse should have an independent source of income to avoid inquiries from the Income tax department.
Also Read Lesser-known tax deduction techniques to save money before ITR filing last date!
Click here for the latest articles
Conclusion
HRA tax exemption is an opportunity for taxpayers to reduce their overall taxation as per the income tax slabs. However, the taxpayer must ensure that all requirements are fulfilled to avoid inquiries by the income tax department, which can lead to trouble later on.
