HRA plus home loan is where regime choice gets tricky. Rent paid, city, salary structure, house location, self-occupied/let-out status, interest certificate and Form 12BB proof can all change the result. Do not select a regime without running both scenarios.
The Income Tax Department employee-benefit guidance sets out the HRA exemption formula under section 10(13A) and Rule 2A style computation: the least of actual HRA, 40%/50% of salary depending on city, and rent paid minus 10% of salary. During the 2025 Act transition, use the official section mapping utility for new references.
House-property guidance confirms a 30% standard deduction on net annual value and interest on borrowed capital where eligible. If an employee owns a house but lives on rent elsewhere, facts and documentation must be carefully reviewed rather than assuming HRA is always allowed or always denied.
| Proof | What HR/employee should verify | Common issue |
|---|---|---|
| Rent agreement and receipts | Landlord name, address, period and amount | Receipts not matching bank transfer. |
| Landlord PAN where applicable | Required by payroll practice for high rent cases | PAN missing in Form 12BB workflow. |
| Home-loan interest certificate | Interest vs principal split | Using provisional certificate but not reconciling final. |
| House property status | Self-occupied, let-out or deemed let-out | Incorrect status in ITR. |
| Regime declaration | Old/new regime selection for payroll | Changing at ITR stage without recomputation. |
This Finin2min article is drafted only from official/government source material. Re-check the live source before publishing if the law, form, threshold or portal workflow has been updated.