ITR filing 2023: My spouse and I shared rental income for FY 2022-23. Can we both claim tax exemption while filing ITR?

My wife and I are working in Delhi and live in a rented accommodation. We pay rent equally. I want to understand since we both shared the rental income for FY 2022-23, can we both claim HRA exemption while filing ITR? If yes, then how?  

Manish, Delhi 

Reply by Maneet Pal Singh, Partner, I.P. Pasricha & Co says 

You must know that if you and your spouse have opted for the new tax regime, both of you will not be entitled to any deduction or exemption on your House Rent Allowance (HRA). This means the amount you and your spouse receive as HRA from your employers will be fully taxable under the new regime.

On the other hand, if you both have opted for the old tax regime, you both will be eligible for HRA relief. However, it would help if you claimed it by informing your employer by submitting rent receipts. If you don't do it, the HRA component of your salary and your spouse's salary may be fully taxable, considering you both haven't claimed rental expenses.

Thus, if you and your spouse jointly own the rental property and both contribute to the rental income, you can claim tax exemption separately while filing your income tax returns (ITR). You both need to submit rent receipts signed by the landlord by the year-end and submit them to your respective employers.

According to the Income Tax Act, each co-owner is entitled to claim their share of the rental income and related expenses. You must calculate and show your respective portions of the rental income and deductions in your individual tax returns based on your ownership percentage.

However, if one of you has opted for the old regime, only that person can avail full tax benefit, and the spouse cannot.

In a nutshell, if you both choose to remain under the old tax regime and wish to avail of HRA benefits, you must get the rent receipts signed before time from your landlord to save on taxes.

(Views expressed by the investment expert are his/her own)

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