HRA Rule: Central government employees receive House Rent Allowance (HRA) while employed, but certain conditions must be met to qualify. Simply renting a home is not sufficient to qualify for HRA. The employee must also declare whether the home they live in is owned by them, their spouse, their children, or their parents or is rented. The employee must also provide a certificate when claiming HRA.
Rules related to government housing
An important rule regarding HRA relates to government housing. If an employee lives in government housing that their parents or children have been provided rent-free by the central or state government, they cannot claim HRA. The same rule applies to housing provided by a government organization, autonomous body, or other government institution. The employee must also certify that their spouse has not been allotted a government housing in the same city.
If the spouse is provided with government accommodation at the same station, the employee must disclose this information. Similarly, if the employee is living in government accommodation with their spouse, children, or parents, HRA cannot be claimed for that accommodation. The employee must confirm these details in the HRA certificate, including their name, position, and date.
Rules on transfer or posting
HRA rules may also change after a transfer or change of posting. If an employee resides in a State Bhavan, Government Guest House, or Departmental Guest House for a period of time after the transfer and receives rent reimbursement under the rules, HRA is not accrued during that period. Similarly, HRA generally ceases upon receipt of government accommodation. However, the date on which HRA ceases depends on the employee’s status and applicable government regulations.
Employees should be cautious even while claiming HRA tax benefits. The entire HRA amount is not tax-free; rather, the deduction is calculated based on established rules. The HRA tax deduction under Section 10(13A) is available under the old tax regime, not the new tax regime. The employee should carefully maintain records of the actual rent paid, the period of stay in the rented accommodation, and the payments. Incorrectly claiming HRA deduction may result in the amount being added to the taxable income, leading to additional tax and interest.