According to the Income Tax Act, 1961, a salaried employee must submit a rent receipt as investment proof to the company HR/Payroll. If you are paying rent this aids you in saving tax as it reduces an individual’s gross taxable income. If you live in a rented accommodation and you wish to generate a Rent Receipt. Next you must calculate your House Rent Allowance.
For calculating House Rent Allowance, you can use following steps: -
Actual HRA received from the employer.
Your actual rent paid, and you have to reduce 10% of your total salary from it.
If you are staying in a metro city, then you have to pay 50% of your basic salary and in a non-metro city, 40% of your basic salary.
If an individual wants to claim HRA, then he/she must submit a rent receipt along with the agreement proof of lease and the landlord’s PAN card details. In order to claim HRA and if you are staying in a house, that is owned by your parents, you should pay rent to your parents and generate a rent receipt. In case your employer is not giving you HRA, then you can claim deduction under section 80GG.
The rent receipt must be produced in the prescribed format to avail tax deductions on payable Income Tax.
Here are the simple steps to generate rent receipts: -
You need to fill your details in the rent receipt templates to generate these receipts.
You are supposed to take a print-out of this receipt.
You need to get your receipt stamped and signed by your landlord, this makes your receipt valid and authentic.
Last but not the least, you need to submit these receipts to your employer in order to get necessary deductions