Can you claim HRA tax exemption for society maintenance charges?
New Delhi, Mar 31, 2025
HRA exemption is applicable only under the old tax regime and cannot be claimed under the new tax regime
Many salaried employees in India reside in housing societies where they often face the dual financial burden of paying rent to their landlords and maintenance charges to the society. This situation raises a pertinent question- can these maintenance charges be claimed for tax exemption under the House Rent Allowance (HRA) provisions?
“No HRA exemption should be allowed if it is paid separately. If composite rent is being paid, including the maintenance charges, the exemption may be allowed,” said Naveen Wadhwa, vice-president, Taxmann.
“Suppose your rent agreement says that rent to be paid to your landlord is Rs 27,000 per month (decided rent 25,000 + maintenance 2,000) and you are paying Rs 27,000 to landlord and landlord paying Rs 2,000 maintenance to society , then you can calculate HRA exemption by considering rent paid figure of Rs 27,000,” said Sujit Sudhakar Bangar, founder, TaxBuddy.com
“Now if as per your rent agreement, you have to pay rent of Rs 25,000 to your landlord and society maintenance has to be paid by you directly to society on actuals , but then HRA exemption can be calculated by considering rent paid amount of Rs 25,000. You have to ignore society maintained charges,” Bangar said.
HRA tax exemption rules
House Rent Allowance (HRA) is a common component of an employee’s salary structure. Salaried individuals who live in rented accommodation and receive HRA as part of their salary can claim tax exemption on it.
The exemption is available under Section 10(13A) of the Income Tax Act and is calculated based on specific rules. The exempted amount is the lowest of the following:
The total HRA received from the employer.
50 per cent of the salary for employees residing in metro cities or 40 per cent for those in non-metro cities.
The actual rent paid minus 10 per cent of the salary.
For this calculation, salary includes only the basic salary and dearness allowance (DA)—other components of the salary are not considered.
Additionally, HRA exemption is applicable only under the old tax regime and cannot be claimed under the new tax regime.
“Maintenance charges, typically for the upkeep of common areas like electricity, security, and elevators, do not strictly qualify as rent. Under Section 194-I, ‘rent’ is broadly defined to include payments for the use of specified assets, which could include buildings, but tribunals have ruled that Common Area Maintenance (CAM) charges are for distinct services and not considered rent,” said Shaily Gupta, partner, Khaitan & Co.
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“To take maximum tax benefit, tenants must ensure that their rental agreement distinctly mentions the rent breakup and maintenance charges, if any,” said Pramod Kathuria, founder and CEO of Easiloan.
[The Business Standard]
