Tag: HRA

Can You Claim Both HRA and Home Loan Interest Deduction?

Posted on by CA Meet Dhrangadhariya

Last updated: 31 July 2026 · Written and reviewed by CA Meet Dhrangadhariya, CSM & Co LLP

Quick summary

  • Yes, you can claim the HRA exemption and home loan interest together if you pay rent for a house you do not own and also have a home loan on another house.
  • The HRA rule needs that the house you live in is not owned by you and that you actually pay rent for it. It does not stop you owning a different house.
  • Interest on a self-occupied house is limited to ₹2 lakh; interest on a let-out house has no such cap on the interest itself.
  • Both claims need genuine proof and, for HRA, the old tax regime. In the new regime, HRA and self-occupied house interest are not allowed.

Many people think they must choose between HRA and a home loan. They do not. The two work on different houses and different heads of income, so they can be claimed together if you meet the conditions of each. Both are claimed in the old tax regime.

The HRA conditions

The HRA exemption is in section 10(13A) of the Income-tax Act, 1961 up to FY 2025-26, and in Schedule III (Table Sl. No. 11) of the Income-tax Act, 2025 from Tax Year 2026-27. It needs:

  • an HRA granted to you by your employer for rent,
  • the house you occupy is not owned by you, and
  • you actually pay rent for that house.

The exemption is the lowest of the HRA received, 50% (eight metro cities) or 40% of salary, and rent paid less 10% of salary (Rule 279 of the Income-tax Rules, 2026).

Nothing in these conditions stops you owning another house elsewhere.

The home loan conditions

Interest on a loan taken to buy or build a house is a deduction from house property income: section 24(b) of the 1961 Act, section 22(1)(b) of the 2025 Act.

  • For a self-occupied house the interest is limited to ₹2 lakh a year, if the house is bought or built within five years from the end of the year in which the loan was taken. Otherwise the limit is ₹30,000.
  • Interest paid before the house is completed is claimed in five equal parts from the year of completion.
  • For a let-out house the interest is deducted in full, but the loss from house property that you can set off against other income is limited to ₹2 lakh a year.
  • Principal repaid is a separate section 80C (section 123) deduction.

Four common situations

Situation HRA and interest together? Note
Own a house in another city and rent a house where you work Yes The usual case.
Own a house in the same city but rent another for a genuine reason, such as distance to work or a school Yes, if genuine Keep full proof of both.
Bought an under-construction flat and live on rent Yes Pre-completion interest is claimed in five equal parts after completion.
Rent out your own loan-financed house and live in a rented house elsewhere Yes The rent you receive is taxed as house property income, and the interest is deducted against it.

A house kept vacant, or used by your family, is generally treated as self-occupied for the interest limit.

Example

Aryan works in Gurgaon, pays rent of ₹10,000 a month and gets an HRA of ₹15,000 a month. His basic salary is ₹40,000 a month. He has a home loan for a house in Bengaluru where his parents live, with interest of ₹20,000 a month.

HRA exemption (monthly): the lowest of ₹15,000 (HRA received), ₹16,000 (40% of basic, as Gurgaon is not one of the eight metro cities) and ₹6,000 (rent ₹10,000 less ₹4,000, which is 10% of basic). So ₹6,000 a month, ₹72,000 a year, is exempt and ₹9,000 a month is taxable.

Interest: ₹2,40,000 a year, but for a self-occupied house the deduction is limited to ₹2,00,000.

New tax regime

In the new regime neither HRA nor interest on a self-occupied house is allowed. Interest on a let-out house is still allowed against the rent received.

Proof you need

  • Rent agreement, rent receipts or bank proof, and the landlord’s PAN if rent is above ₹1,00,000 a year.
  • The lender’s interest certificate, the loan agreement and the possession or completion papers.
  • The declaration to your employer in Form 124 (earlier Form 12BB).

Frequently asked questions

Can I claim HRA and home loan interest together?

Yes, if you live in a rented house that you do not own, pay rent, and have a home loan on a different house, in the old tax regime.

Can I claim both if the loan house is in the same city?

The law does not bar it, but the claim must be genuine, for example because the house is let out, too far from work or under construction. Keep full proof.

What is the limit on home loan interest?

₹2 lakh a year for a self-occupied house, if construction or purchase is completed within five years of the year the loan was taken. Otherwise ₹30,000.

Is this available in the new tax regime?

No. HRA and the interest on a self-occupied house are not allowed in the new regime. Interest on a let-out house is allowed.

Official sources

Related reading

Disclaimer

This article is for general informational purposes only and should not be considered professional advice. Please consult a qualified expert for advice tailored to your specific situation. The author and website owner are not liable for any errors or actions based on this content.

What is House Rent Allowance (HRA): Exemption, Calculation and New Rules 2026

Posted on by CA Meet Dhrangadhariya

Last updated: 29 September 2026 · Written and reviewed by CA Meet Dhrangadhariya, CSM & Co LLP

Quick summary

  • HRA is partly or fully tax-free for a salaried employee who pays rent, but only in the old tax regime.
  • The exemption is the lowest of actual HRA, 50% (metro) or 40% (non-metro) of salary, and rent paid minus 10% of salary.
  • From 01/04/2026 the 50% limit applies to eight cities: Delhi, Mumbai, Chennai, Kolkata, Bengaluru, Pune, Hyderabad and Ahmedabad.
  • Landlord PAN is needed if yearly rent exceeds ₹1 lakh. Without HRA, rent can be claimed under section 80GG (section 134 in the new Act), up to ₹60,000 a year.

How to calculate the HRA exemption

1. Take the actual HRA received in the year
↓
2. Take 50% (8 metro cities) or 40% (other cities) of salary
↓
3. Take rent paid minus 10% of salary
↓
4. The lowest of the three is the exempt HRA
↓
5. The rest of the HRA is taxable as salary

House Rent Allowance (HRA) is a part of salary paid by the employer to meet the cost of rented accommodation. A part of it is exempt from tax if you live in a rented house and pay rent, provided you file under the old tax regime. It cannot be claimed in the new regime.

HRA eligibility: who can claim?

Person HRA exemption?
Salaried, with HRA in the salary Yes, in the old regime
Self-employed No, but section 80GG may apply
Salaried without an HRA component No, but section 80GG may apply
Paying rent to parents Yes, with conditions
Paying rent to spouse No
New tax regime No

How is the HRA exemption calculated?

The exempt amount is the lowest of:

  1. The actual HRA received.
  2. 50% of salary if you live in one of the eight metro cities, or 40% of salary elsewhere.
  3. Rent paid minus 10% of salary.

Salary here means basic pay plus dearness allowance, but dearness allowance counts only if the terms of employment provide for it. All other allowances and perquisites are left out. Rent and salary are taken only for the months you actually lived in the rented house. The part of HRA that is not exempt is taxed as salary.

New rules from 01/04/2026

The Income-tax Rules, 2026 (notified on 20/03/2026) apply from 01/04/2026. HRA limits are now in Rule 279, which replaces Rule 2A. Two changes matter for HRA:

  • The 50% limit, earlier given only to Delhi, Mumbai, Chennai and Kolkata, now also covers Bengaluru, Pune, Hyderabad and Ahmedabad, so eight cities in all.
  • The declaration to the employer now asks for the landlord’s relationship to you and other landlord details, The declaration form that replaces Form 12BB is Form 124 (Rule 205 of the 2026 Rules). It asks for the landlord’s name, address, PAN, Aadhaar, relationship with you, if any, and the rent paid.

HRA in the Income-tax Act, 2025

For FY 2025-26 (assessment year 2026-27) HRA is exempt under section 10(13A) of the 1961 Act. From Tax Year 2026-27 it falls under section 11 read with Schedule III of the Income-tax Act, 2025, and the rent deduction for those without HRA (section 80GG) moves to section 134.

Example of HRA calculation

Mr Anwar pays rent of ₹18,000 a month in FY 2025-26. His basic salary is ₹27,000 a month (₹3,24,000 a year) and his HRA is ₹1,62,000 a year. He is under the old regime. The calculation below uses the metro (50%) limit and the non-metro (40%) limit.

Particulars Metro city Other city
Actual HRA ₹1,62,000 ₹1,62,000
50% or 40% of salary (₹3,24,000) ₹1,62,000 ₹1,29,600
Rent paid (₹2,16,000) less 10% of salary (₹32,400) ₹1,83,600 ₹1,83,600
Exempt HRA (lowest) ₹1,62,000 ₹1,29,600
Taxable HRA Nil ₹32,400

If Mr Anwar opts for the new regime, the whole HRA of ₹1,62,000 is taxed at slab rates.

Old regime or new regime?

Choose the old regime only if the total of HRA, 80C, 80D, home loan interest and other deductions is large enough to beat the lower slabs of the new regime. High rent in a metro city and a high HRA make the old regime more attractive. Low rent and few deductions usually favour the new regime.

Documents for HRA

You need not file proofs with the return, but keep them for your employer and for any notice from the department:

  1. Rent receipts.
  2. Rent agreement.
  3. Bank proof of rent payment.
  4. The rent declaration given to your employer (Form 12BB until 31/03/2026).
  5. Salary slip showing HRA.
  6. Landlord’s PAN, if the rent in the year is more than ₹1,00,000.

If the landlord has no PAN, get a declaration to that effect from the landlord, as provided in CBDT Circular 8/2013 dated 10/10/2013.

Special cases

Rent paid to parents

You can claim HRA for rent paid to your parents if you genuinely pay it, for example by bank transfer, and your parents declare it as rental income in their return. Rent paid to a spouse is not allowed.

HRA and home loan together

If you own a house in one city and pay rent in another, for example because of a job transfer, you can claim both the HRA exemption and home loan interest. Conditions apply if both are in the same city, so take advice.

Rent deduction if you do not get HRA: section 80GG

Self-employed persons and employees who get no HRA can claim rent paid under section 80GG (section 134 from Tax Year 2026-27), in the old regime only. The deduction is the lowest of:

  • ₹5,000 a month, that is ₹60,000 a year,
  • 25% of adjusted total income, or
  • rent paid minus 10% of adjusted total income.

You (and your spouse and minor children) must not own a residential house at the place where you live or work, and you must file Form 10BA (Form 31 under the 2026 Rules from 01/04/2026) as a declaration.

Frequently asked questions

Is HRA available in the new tax regime?

No. The HRA exemption can be claimed only under the old tax regime.

Which cities get the 50% HRA limit?

From 01/04/2026: Delhi, Mumbai, Chennai, Kolkata, Bengaluru, Pune, Hyderabad and Ahmedabad.

Is landlord PAN required?

Yes, if the rent paid in the year is more than ₹1,00,000. If the landlord has no PAN, a declaration to that effect from the landlord is needed.

Can I claim HRA for rent paid to my parents?

Yes, if you actually pay the rent and your parents show it as income in their return. Rent paid to a spouse is not allowed.

Can I claim HRA and home loan interest together?

Yes, if the conditions are met, for example when you live in a rented house in one city and own a house in another.

Official sources

Related reading

Disclaimer

This article is for general informational purposes only and should not be considered professional advice. Please consult a qualified expert for advice tailored to your specific situation. The author and website owner are not liable for any errors or actions based on this content.

Section 80GG: Deduction for Rent Paid Without HRA, Conditions and Limit

Posted on by CA Meet Dhrangadhariya

Last updated: 06 August 2026 · Written and reviewed by CA Meet Dhrangadhariya, CSM & Co LLP

Quick summary

  • Section 80GG gives a deduction for rent paid to an individual who gets no HRA exemption, including the self-employed.
  • The deduction is the least of ₹5,000 a month, 25% of total income, and rent paid minus 10% of total income.
  • You and your spouse and minor children must not own a residential house where you live or work, and you must file a rent declaration.
  • From Tax Year 2026-27 it is section 134 of the Income-tax Act, 2025 and the declaration is Form 31. It is available only in the old tax regime.

If you pay rent but do not get an HRA exemption, section 80GG lets you deduct part of the rent from your income. It suits self-employed people and employees whose salary has no HRA component. It is available only under the old tax regime.

From Tax Year 2026-27 the provision is section 134 of the Income-tax Act, 2025. For FY 2025-26 (assessment year 2026-27) it is still section 80GG of the 1961 Act.

Who can claim?

An individual who pays rent for furnished or unfurnished accommodation that they occupy as their own residence, and who:

  • gets no HRA exemption (no income falling under the HRA exemption of the Act),
  • does not own, and whose spouse or minor child (or HUF, for a HUF member) does not own, a residential house at the place where they ordinarily live or work, and
  • does not own another house that they occupy and that is valued as a self-occupied property under the house property rules.

How much can you claim?

The deduction is the least of:

  1. ₹5,000 a month, that is ₹60,000 a year.
  2. 25% of total income.
  3. Rent paid in the year minus 10% of total income.

Total income here means total income before allowing the 80GG deduction.

Example

Mr Shah is a consultant paying rent of ₹15,000 a month, so ₹1,80,000 a year. His total income before this deduction is ₹6,00,000.

Test Amount in ₹
Limit of ₹5,000 a month 60,000
25% of total income 1,50,000
Rent less 10% of income (1,80,000 less 60,000) 1,20,000
Deduction (the least) 60,000

Declaration: Form 10BA and Form 31

  • Up to FY 2025-26 you file Form 10BA to declare that you meet the conditions.
  • Under the Income-tax Rules, 2026 the declaration is Form 31 (Rule 65), filed for claiming the deduction under section 134.
  • The form asks for your name, address, PAN, the address of the premises, the months you stayed, the rent paid in cash and by other modes, and the landlord’s name, PAN and address. It also asks you to certify that no other residential accommodation is owned by you, your spouse or your minor child (or your family for a HUF) where you live or work.

Old regime and the due date

Section 80GG works only in the old regime. A person without business income opts for the old regime along with the return furnished by the due date. If you file late, the new regime applies and you lose the deduction. A person with business or professional income has to opt out of the new regime in the manner and time the Act prescribes.

How is it different from HRA?

Basis HRA exemption Section 80GG
Who Salaried, with HRA in salary Self-employed, or salaried without HRA
Limit Lowest of HRA, 50% or 40% of salary, rent less 10% of salary Least of ₹5,000 a month, 25% of income, rent less 10% of income
Regime Old regime only Old regime only
Both together? Not allowed Not allowed

Frequently asked questions

Who can claim section 80GG?

Individuals who pay rent for their own residence and get no HRA exemption, including the self-employed and employees without an HRA component.

What is the limit under section 80GG?

The least of ₹5,000 a month (₹60,000 a year), 25% of total income, and rent paid minus 10% of total income, all measured before this deduction.

Can I claim 80GG if I own a house?

Not if you, your spouse, minor child or HUF own a residential house at the place where you live or work, or if you own another house you occupy that is treated as self-occupied.

Which form do I need for section 80GG?

Form 10BA up to FY 2025-26, and Form 31 under the Income-tax Rules, 2026 from 01/04/2026.

Is section 80GG available in the new tax regime?

No. It is available only in the old tax regime.

Official sources

Related reading

Disclaimer

This article is for general informational purposes only and should not be considered professional advice. Please consult a qualified expert for advice tailored to your specific situation. The author and website owner are not liable for any errors or actions based on this content.

Form 124 (Earlier Form 12BB): What It Is and How to Fill It

Posted on by CA Meet Dhrangadhariya

Last updated: 05 August 2026 · Written and reviewed by CA Meet Dhrangadhariya, CSM & Co LLP

Quick summary

  • Form 124 is the statement an employee gives the employer to claim HRA, LTA, home loan interest and Chapter VIII deductions while TDS is calculated. It replaces Form 12BB from 01/04/2026.
  • It has Part A (your details) and Part B (claims and evidence), and is filed once a year with the employer. It is not uploaded on the income tax portal.
  • For HRA you give the landlord’s name, address, PAN, Aadhaar, relationship, if any, and the rent paid. Landlord PAN is a must if yearly rent exceeds ₹1,00,000.
  • If you do not submit it, the employer deducts TDS without allowing any deduction or exemption.

How to submit Form 124 to your employer

1. Check your salary structure for HRA and LTA
↓
2. Collect rent agreement, travel proofs, loan and investment documents
↓
3. Fill Part A with your name, address, PAN, contact details and tax year
↓
4. Fill Part B with the claims you want considered
↓
5. Sign the declaration and hand it to your employer, online or on paper

Every year your employer deducts tax at source (TDS) from your salary. To deduct the right amount, the employer needs to know about your rent, travel, home loan and investments. You tell the employer through a statement. Until 31/03/2026 this was Form 12BB. From 01/04/2026 under the Income-tax Rules, 2026 it is Form 124.

Form 12BB and Form 124 side by side

Old New
Form Form 12BB Form 124
Rule Rule 26C, Income-tax Rules, 1962 Rule 205, Income-tax Rules, 2026
Section Section 192 of the 1961 Act Section 392(5)(b) of the Income-tax Act, 2025

Who files it, and when?

An employee gives it to the current employer, once every financial year, as early as possible so the TDS is calculated correctly. It is only needed if you want your claims considered. If you do not submit it, the employer deducts TDS without allowing any deduction or exemption, and you can claim them later in your own return.

If you change jobs in the year, give the new employer your details of income and TDS from the old employer (Form 122), along with a fresh Form 124.

What does the form contain?

Part A: employee details. Name, address, PAN, email id, contact number and tax year.

Part B: claims and evidence.

  1. House rent allowance: name and address of the landlord, landlord’s PAN, Aadhaar, relationship with the landlord (if any) and the rent paid. Give a copy of the rent agreement.
  2. Leave travel concession or assistance: the travel details, with documents supporting the claim.
  3. Interest on borrowing: name and address of the lender, lender’s PAN where available and the interest paid or payable. Give a copy of the loan agreement.
  4. Deductions under Chapter VIII (A and B): the sections you claim, for example section 123 (the old section 80C), section 124 (NPS), section 129 (education loan interest), section 130, section 131 and section 153 (interest on deposits), with proofs.
  5. Other details as an annexure.

Then comes your declaration that the information is complete and correct.

Landlord PAN

The PAN of the landlord must be furnished if the rent in the year is more than ₹1,00,000. Aadhaar is not mandatory unless your employer asks for it.

Do I file it on the portal?

No. Form 124 goes to your employer, electronically or on paper. It is not uploaded separately on the income tax portal.

Before you fill it

  • Check that HRA and LTA are part of your salary structure. If they are not, there is nothing to claim.
  • Collect the rent agreement and rent receipts, travel tickets, the home loan interest certificate and the investment proofs.
  • Remember that most of these claims work only in the old tax regime. Tell your employer which regime you choose.

Documents you may need

Claim Supporting document
House rent allowance Rent agreement, rent receipts or bank proof, landlord’s PAN if rent is above ₹1,00,000 a year
Leave travel allowance Tickets, boarding passes or invoices
Home loan interest Loan agreement and the lender’s interest certificate
Section 123 items: PPF, ELSS, life insurance, tax-saver FD, NSC, tuition fees Receipts, certificates, passbook
Health insurance premium (80D) Premium receipts
Education loan interest Lender’s certificate showing interest paid
Disability deductions Medical authority’s certificate
Donations Valid receipts in your name

A few tips

  • If you pay rent to your parents, make the payments by bank transfer and ask them to show it as income in their return.
  • Do not submit false rent receipts. It can lead to action by the tax department.
  • Declare only what you really expect to spend. If you do not invest later, your TDS may be short and you will pay more tax when you file.
  • You can still claim missed deductions in your return, so do not worry if you could not give every proof to your employer.

Frequently asked questions

What is Form 124?

A statement showing particulars of claims by an employee for deduction of tax at source under section 392(5)(b) of the Income-tax Act, 2025, read with Rule 205 of the Income-tax Rules, 2026. It replaces Form 12BB.

Is Form 124 compulsory?

No. You file it only if you want the employer to consider your deductions and exemptions while computing TDS.

Do I upload Form 124 on the income tax portal?

No. You give it to your employer, in electronic or physical form.

Is landlord PAN compulsory?

Yes, if the yearly rent exceeds ₹1,00,000. Aadhaar is not compulsory unless the employer asks for it.

Do I need Form 124 for the standard deduction?

No. The standard deduction is allowed in every case.

Official sources

Related reading

Disclaimer

This article is for general informational purposes only and should not be considered professional advice. Please consult a qualified expert for advice tailored to your specific situation. The author and website owner are not liable for any errors or actions based on this content.