As Per Income Tax Act, 1961 “HRA is Exempted” in following circumstances:
i) Any special allowance specifically granted to an Assessee by his employer to meet expenditure actually incurred on payment of rent.
ii) In respect of residential accommodation occupied by the Assessee,
iii) To such extent as may be prescribed having regard to the area or place in which such accommodation is situated and other relevant considerations.
Case:
Income From House Property—Sec. 10(13A)—IT ACT, 1961—Deputy Commissioner of Income-tax v. Kuldeep D. Kaura. [2012] 137 ITD 370 (ITAT-AHMEDABAD)
Reference:
As Per Section 10(13A) & Rule 2A, of the Income Tax Act, 1961-
Section 10(13A) of Income tax Act, 1961-
In computing the total income of a previous year of any person, any income falling within any of the following clauses shall not be included—
any special allowance specifically granted to an Assessee by his employer to meet expenditure actually incurred on payment of rent (by whatever name called) in respect of residential accommodation occupied by the Assessee, to such extent as may be prescribed having regard to the area or place in which such accommodation is situate and other relevant considerations.
[Explanation.—
For the removal of doubts, it is hereby declared that nothing contained in this clause shall apply in a case where—
(a) the residential accommodation occupied by the Assessee is owned by him ; or
(b) the Assessee has not actually incurred expenditure on payment of rent (by whatever name called) in respect of the residential accommodation occupied by him;]
Limits for the purposes of section 10(13A) under sec 2A-
The amount which is not to be included in the total income of an Assessee in respect of the special allowance referred to in clause (13A) of section 10 shall be—
(a) the actual amount of such allowance received by the Assessee in respect of the relevant period; or
(b) the amount by which the expenditure actually incurred by the Assessee in payment of rent in respect of residential accommodation occupied by him exceeds one-tenth of the amount of salary due to the assessee in respect of the relevant period; or
(c) an amount equal to—
(i) where such accommodation is situate at Bombay, Calcutta, Delhi or Madras, one-half of the amount of salary due to the assessee in respect of the relevant period; and
(ii) where such accommodation is situate at any other place, two-fifth of the amount of salary due to the assessee in respect of the relevant period,
whichever is the least.
[Explanation.—
In this rule—
(i) “salary” shall have the meaning assigned to it in clause (h) of rule 2 of Part A of the Fourth Schedule;
(ii) ”relevant period” means the period during which the said accommodation was occupied by the assessee during the previous year.]