Rent Receipts for Income Tax: Everything You Need to Know

bySharath ReddyLast Updated: March 18, 2024
Rent Receipts for Income Tax: Everything You Need to Know

Salaried individuals often come across house rent allowance mentioned in their salary package. Due to inexperience or lack of understanding of how salary structure works, they are not fully aware of how to utilise a rent receipt for income tax to their benefit. Rent receipts play a crucial role in helping the salaried individual to claim the deductions for income tax return filing.

This article will give you an idea of why preserving a rent receipt for income tax is useful.

What is a Rent Receipt and Why is It Important?

A rent receipt is a document proving that rent has been paid by the tenant to their landlord. The receipt document is provided by the landlord after the rent has been received by the rentee and the signatures are placed on it. If the rent receipt has been received then the documents should be kept carefully. Rent receipts are used for tax benefits or legal matters when you are considered eligible.

To claim the House Rent Allowance (HRA) from the employer, the rent receipts are often kept as evidence. The employer provides allowances and deductions after verification of the documents. The HRA allowance is based on the rent receipts and is calculated as per the requirement.

How to Generate House Rent Receipt for Income Tax

Salaried professionals are compelled to pay house rent allowance as income tax and generating such a receipt has become quite easy. Generating house rent receipts can seem challenging in the beginning but when handled correctly, the yields are highly beneficial.

Claiming HRA for Tax Benefits

By claiming the HRA exemption, salaried individuals can end up saving a huge amount of money. The house rent allowance is linked with the account and with the passage of time as the income rises so does the house rent allowance. One is eligible to claim HRA on the condition that they are living in a rented apartment or accommodation and are periodically paying rent. The employer is legally responsible for providing HRA as part of the salary since it is beneficial to the employees without adding to the employer’s cost.

Features of HRA

As a salaried individual residing in a rented accommodation, HRA is one of the best tax-saving options. The process of HRA tax exemption is complicated but it offers significant benefits. Now, how the HRA tax exemption can be determined, is based on three factors:

  • Amount provided as HRA by the employer
  • Basic salary of the employer
  • Rent that the employer is paying

HRA amount eligible for tax exemption is to be calculated on the following factors:

  • Payable rent

This comprises a 10% basic salary. This suggests that exemption is made only over 10% of the basic pay that the organisation is paying to the employee.

  • Verified HRA received by the employee

The tax-exemption limit is capped by the HRA that is being received.

House Rent Receipt Format for Income Tax

There are many formats and designs that are available on the market and used by landlords to obtain their rent from the tenant. A sample rent receipt has been provided, mentioning the important criteria.

Important Things to Note About Rent Receipts

Some of the most important things to note about rent receipts are mentioned below:

  • A revenue stamp has to be affixed on the rent receipts if the cash payment value exceeds INR 5,000 per receipt. This rule does not apply if the rent is paid through cheque.
  • The rent receipts for all months that the employee is claiming the HRA, have to be submitted.
  • When the annual rent paid exceeds INR 1,00,000, it is important to report the PAN of the landlord in order to claim HRA exemption. When the landlord refuses to provide the PAN, then the HRA for rent paid exceeding INR 1,00,000 cannot be claimed and the employer deducts the TDS accordingly.

How to Ensure that HRA isn’t Rejected?

To ensure that the House Rent Allowance (HRA) claim does not get rejected, one has to methodically follow the procedure and keep all necessary documents handy.

  • Genuine Rent Payment

This document ensures the rent is being paid for the claim that has been raised. The landlord must not be a close relative. This further assures eligibility.

  • Rent Agreement

If there is a rent agreement with the landlord, a copy of the agreement must be kept as tenancy proof.

  • Rent Receipts

Original rent receipts should all be collected from the landlord and preserved. The receipts must contain details such as address, landlord’s name, rent amount and the period for which the rent is being paid. Rent receipts should be appropriately signed by the landlord.

  • PAN Details of Landlord

If the total annual rent being paid exceeds INR 1,00,000 then the landlord’s Permanent Account Number (PAN) has to be provided to the employer. Not providing PAN can lead to the rejection of the claim.

  • HRA Component in Salary

Make sure that the salary structure clearly states HRA components.

  • Actual Residency

You need to confirm that you are living at the rented premises and not obtaining rent receipts for the purpose of saving tax.

  • Payment Proof

If the rent payments are being made in cash, then records such as withdrawal slips and bank statements need to be maintained in order to support the transactions.

  • Form 12BB

A statement of the house rent receipts needs to be submitted to the employer in Form 12BB in order to claim the HRA benefits. This is needed at the time of filing income tax returns.

  • Timely Filing

File the income tax return timely meeting the deadlines.

  • Information Consistency

Make sure that the details provided in the tax return documents align with the information mentioned in the supporting documents to avoid any incongruity.

What to Do if Landlord Refuses PAN?

At the time of submitting all documents for claiming HRA, the PAN number of the landlord is needed. In the event that the landlord does not have a PAN card, then the salaried individual can obtain a declaration form from them and submit it to HR.


House rent allowance is paid by many reputed organisations to salaried individuals in order to meet the cost of living in a rented apartment. HRA is one of the best ways by which you can save on tax as the total amount is not taxable. So, it is advised that you keep all your rent receipts for income tax safely. They are important documents proving that rent has been paid and there are no fake expenses involved in order to evade tax.

How much money can be saved with a rent receipt for income tax?
The money that can be saved depends on three conditions — actual HRA received, 40% of salary, and the rent paid is less than 10% of salary.
What happens if I forget to submit a rent receipt for income tax during the declaration?
Even if the salaried individuals forget to submit the rent receipts, they can still claim house rent allowance at the time of filing ITR.
Who is eligible to claim for HRA exemption?
The HRA exemption can be claimed on conditions such as — the salaried individual lives in rented accommodation and receives HRA as part of the salary structure.

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