The date of filing income tax is approaching, and taxpayers are busy knowing which tax system is more beneficial for them – new or old? Can more tax be saved in the new tax system or is the old system better? Meanwhile, a big question is whether a person claiming House Rent Allowance (HRA) under the old tax system can also claim tax exemption on the maintenance fee paid to the society.
Nowadays, the number of people living in housing societies in cities is increasing rapidly, and they also have to pay maintenance fees. So can tax exemption be availed on this fee as well? Let us know the answer to this question with the opinion of experts.
Increasing number of people living in society and the question of maintenance
Nowadays, a large number of people live in housing societies in cities, where they have to pay maintenance fees regularly. In a way, this is also a part of the rent, but it is not considered as rent directly. In such a situation, the question arises whether the benefit of tax exemption can also be availed on this maintenance fee? An ET report has tried to answer this question by quoting experts.
Read More:- PM Kisan Yojana Update: Great News For Farmers, Govt Raises ₹6000 amount to ₹9000
Read More:- SBI Card Update: Major Reward Points Reduction on Air India, Swiggy & More
Does maintenance come under the purview of HRA exemption
Abhishek Soni, CEO of the ITR filing website Tax2Win.in, says that there is no specific mention of HRA exemption on maintenance charges in the Income Tax Act. He believes that if the tenant pays maintenance charges to the landlord, and the landlord sends that payment to the society, then it should be mentioned as part of the rent in the rental agreement.
However, this will increase the rent of the landlord and he will not get any benefit from the expenses paid (maintenance charge). On the other hand, if the maintenance charge is paid directly by the tenant to the society, then such maintenance charges will not be eligible for HRA tax exemption.
HRA only on rent payment
At the same time, Sanjoli Maheshwari, Executive Director, Nangia Andersen India, says that as per the provisions of Section 10 (13A) of the Income Tax Act, 1961, tax exemption is allowed on HRA only on rent payment in respect of a house rented by a salaried taxpayer.
Other expenses, such as maintenance charges, electricity charges, utility payments, etc., even if part of the rent as per the contract, will not be considered as part of the rent payment as per the applicable provisions and, therefore, will not be eligible for claiming tax exemption.
Maintenance will not be considered as rent
According to Aditi Goyal, Tax Partner, Trilegal, under the Income Tax Act, salaried employees are eligible to claim HRA exemption on fulfilling certain conditions. Such exemption is given in respect of any allowance given by the employer specifically to meet the expenditure incurred on payment of rent.
HRA exemption should be limited only to the payment of rent. In cases where the tenant is required to make additional payments in the form of maintenance charges, electricity bills, water bills, etc., such amounts which do not qualify as rent should not be made part of the expenditure eligible for HRA exemption.
Know eligibility and method of calculation
Usually, HRA is included as a component in the salary structure of an employee. A salaried employee can claim tax exemption on HRA if he is living in a rented house and receives HRA as part of salary. HRA tax exemption can be claimed under section 10(13) of the Income Tax Act. The income tax law defines the amount of HRA tax exemption that an employee can claim.
Read More:- Lado Protsahan Yojana: Rajasthan Govt’s ₹1.5 Lakh Scheme for Daughters, First Installment Released