The income tax filing season is here and one of the most important aspects of this process is to assemble all the necessary documents. The Income Tax Return (ITR) filing for FY 2024-25 (AY 2025-26) has already started, though the deadline has been extended till Sept. 15, 2025, from July 31 earlier.
Among other things, house rent allowance (HRA) is a critical part of ITR filing. Taxpayers heavily rely on the HRA deductions to reduce their overall taxable income. Taxpayers should note that while HRA is an important component of one's salary, deductions may not be claimed for the entire amount.
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You can claim the HRA deductions only under the old tax regime. For FY 2024-25, the default regime is the new tax regime and it does not allow the HRA deductions. You have to opt for old tax regime for FY25 to claim tax benefits on the payments for a rented accommodation.
To understand your tax liabilities in a better way, several digital tools are available these days, which can help simplify the process of understanding how the HRA works. With the rising property costs and rents going up in most cities and small towns, the HRA tracker in June can help you significantly reduce your overall tax burden.
HRA Tracker: Key Factors To Keep In Mind
An HRA tracker is nothing but a digital tool to track rent payments to ensure accurate HRA claims. One can also create a manual tracker simply by keeping a record of the following things:
1. Landlord details
2. Rent amount
3. Payment dates
4. Receipts
5. Your salary break-up details
A simple record of these details will help you track your house rent expenses and avoid any potential discrepancies while claiming HRA for a particular financial year. You may be paying your landlord their rent on specific dates, but keeping a record of dates could help you in error-free ITR filing.
Alternatively, you can also use one of the digital tools available online for HRA deductions. An online HRA calculator can help you have a clear overview of rental expenses each month and ensure maximum error-free calculations of deductions and tax liability.
HRD Deductions
According to income tax rules, the lowest of the following is exempt from income tax:
1. Actual HRA received from an employer.
2. 50% of basic salary for those living in metro cities and 40% for those living in non-metro cities.
3. Actual rent paid in a financial year minus 10% of the annual basic salary.
Notably, the Income Tax Department also offers a digital HRA tracker, where one can check their tax liability related to rental expenses.
Steps To Use Income Tax Department's HRA Tracker:
1. Visit the official website at: https://incometaxindia.gov.in/Pages/tools/house-rent-allowance-calculator.aspx .
2. Fill in details such as basic salary, DA, commission, rent paid, whether residing in a metro, etc.
3. Hit the ‘Submit' button.
4. Your total taxable HRA will appear on the screen.
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