How to Claim Both HRA and LTA Deductions in Your ITR Filing and Avoid Tax Notices for Incorrect Claims
- Bhavika Rajput
- Jun 11
- 9 min read
Claiming both House Rent Allowance (HRA) and Leave Travel Allowance (LTA) in one financial year can significantly reduce taxable income, if done correctly. These two exemptions are among the most misreported in ITR filings, often leading to mismatches with Form 16 or missing documents. Such errors commonly trigger tax notices and penalties. It’s crucial to file with precision, retain proper documentation, and stay within the eligibility norms under the Indian Income Tax Act, 1961. This guide lays out how to claim both HRA and LTA deductions in your ITR and avoid common pitfalls.
When both HRA and LTA are part of your salary structure and you're under the old tax regime, you’re allowed to claim both exemptions in the same year. However, it's essential to ensure your declarations match your documents and are reported correctly in the respective ITR schedules. Done right, this can help you legally reduce your tax burden and stay compliant without worrying about tax notices.
Table of Contents
Choosing the Right Tax Regime: Are HRA and LTA Allowed?
Under the Income Tax Act, exemptions like HRA and LTA are allowed only if the taxpayer chooses the old tax regime. This regime continues to support common exemptions and deductions such as:
HRA under Section 10(13A)
LTA under Section 10(5)
Taxpayers opting for the new tax regime under Section 115BAC must forego these exemptions. All such allowances then become fully taxable.
Important:
The choice of regime must be made explicitly while filing ITR.
Salaried employees can switch regimes every financial year.
If planning to claim HRA and LTA, ensure your Form 10-IE (if applicable) supports the old regime selection.
HRA Deduction Rules and Documentation
Who Can Claim HRA?
Only salaried individuals who receive House Rent Allowance as part of their salary and live in rented accommodation can claim this exemption.
HRA Exemption Calculation
The exempt portion of HRA is the least of the following:
Actual HRA received
50% of basic salary + DA (metro cities); 40% for non-metros
Rent paid – 10% of basic salary + DA
Example Table:
Particulars | Amount (₹) |
HRA Received Annually | ₹2,40,000 |
Rent Paid – 10% of Basic Salary | ₹1,80,000 |
50% of Basic (Metro City) | ₹3,00,000 |
Exempt HRA | ₹1,80,000 |
Required Documents
Monthly or quarterly rent receipts
Rental agreement with landlord’s details
Landlord’s PAN (mandatory if rent > ₹1,00,000/year)
Form 12BB (submitted to employer)
LTA Deduction Rules and Claim Procedure
Who Can Claim LTA?
Salaried individuals who receive LTA as part of their CTC can claim this exemption under the old regime.
Key Rules for LTA Exemption
Applicable only for domestic travel
Covers self, spouse, up to two children, and dependent parents
Can be claimed for two journeys in a four-year block (2022–2025)
Exemption limited to actual travel fare via shortest route
Only economy air, first AC rail, or equivalent public transport fares allowed
Accommodation, meals, and local transport are excluded
Claiming LTA in ITR
Ideally, submit travel proofs to the employer before March 31
If missed, claim directly in your ITR with supporting documentation
Enter LTA exemption under the correct ITR schedule
Required Documents
Original tickets or boarding passes
Proof of family members (if claiming for dependents)
Invoices from travel operators
How to Claim Both HRA and LTA in ITR Filing
Follow these steps to safely claim both exemptions:
Choose the old regime during ITR filing.
Check your Form 16 – note if HRA and LTA are pre-claimed.
If missed in Form 16, claim directly in ITR (ITR-1 or ITR-2 depending on income type).
Enter HRA under 'Exempt Allowances' in the salary schedule.
Enter LTA exemption under Section 10(5) in the appropriate schedule.
Retain all proofs (rent receipts, tickets, etc.) even if not uploaded.
Cross-check claims to ensure no mismatch with employer filings.
Platforms like TaxBuddy ensure all these steps are guided, validated, and filed error-free, using automation and expert reviews.
Common Mistakes That Trigger Tax Notices
1. Mismatch Between Form 16 and ITR
Form 16 is issued by the employer and reflects the salary structure and exemptions they’ve accounted for during the year. If HRA or LTA exemptions were not claimed through the employer or not supported by submitted proofs, they will not appear in Form 16. However, many taxpayers attempt to claim these exemptions directly while filing their ITR.
When the Income Tax Department compares Form 16 data with the ITR entries and finds discrepancies—such as an exemption in the ITR that doesn’t appear in the employer’s return—it often leads to an automated notice. The system flags these as potential misreporting cases, and the taxpayer is asked to justify the claim by submitting supporting documentation.
To avoid this, either:
Submit all necessary documents to your employer before March 31, or
If claiming independently in the ITR, ensure accurate entry and retain full documentation (rent receipts, tickets, etc.) for later verification.
2. Missing PAN of Landlord
As per income tax rules, if the annual rent paid exceeds ₹1,00,000 (₹8,333/month), the PAN of the landlord must be provided while claiming HRA exemption. Failure to do so can lead to the exemption being disallowed.
The purpose of this rule is to ensure that the rental income is being reported by the landlord as well. If PAN is not available, the taxpayer should obtain a written declaration from the landlord stating the reason for non-availability. In many cases, not mentioning the PAN or entering a wrong one results in system mismatches or validation errors during processing.
Common issues include:
Entering incorrect or dummy PANs
Skipping the PAN field entirely despite high rent
Citing non-cooperation by landlord without valid explanation
Ensure the PAN is correctly mentioned in Form 12BB or directly in the ITR, and retain rent receipts with the PAN clearly noted.
3. Invalid Travel Claims for LTA
LTA exemptions come with strict eligibility conditions. Even minor deviations from the rules can result in claim rejection or future scrutiny. Below are some of the most frequent invalid claims:
a. Foreign Travel
LTA exemption applies only to domestic travel within India. Any international leg, even partially, disqualifies the entire trip. This includes connecting flights or transits via foreign cities.
b. Third Journey in a Four-Year Block
The Income Tax Act allows only two LTA exemptions in a four-year block (current block: 2022–2025). Any attempt to claim a third journey, even if genuine, will be disallowed. The system checks this against previous filings.
c. Non-Family Travel
LTA covers travel expenses for:
Self
Spouse
Up to two children (if born after October 1, 1998)
Dependent parents
Travel for siblings, in-laws, friends, or any non-dependent relative is not eligible. Claiming such trips under LTA is invalid and may be flagged during assessment.
To safeguard your claim:
Travel within India
Restrict claims to two eligible journeys per block
Ensure travel members meet the dependency and family criteria
Retain tickets, boarding passes, and ID proofs of family members as evidence
Using platforms like TaxBuddy helps validate these rules automatically during filing and avoids unintentional errors that could trigger tax notices.
Best Practices to Avoid Tax Notices When Claiming HRA and LTA
Submit Form 12BB and proofs to your employer in time.
Choose the correct regime while filing.
If claiming directly, keep documentation for at least 6 years.
Match every entry in ITR with Form 16 and payslips.
Use trusted platforms like TaxBuddy to guide exemption claims and avoid missing critical steps.
TaxBuddy’s app ensures reminders, document storage, and expert checks for complete peace of mind.
Conclusion
Filing both HRA and LTA claims in your ITR can help save a significant amount in taxes, provided every detail is documented and filed with precision. From verifying your tax regime to maintaining receipts and cross-checking Form 16, every step counts. Tools like TaxBuddy can help automate calculations, flag errors, and ensure accurate filings. For a smooth, secure, and guided tax filing experience, download the TaxBuddy mobile app and file your return the smart way.
FAQs
Q1. Does TaxBuddy offer both self-filing and expert-assisted plans for ITR filing, or only expert-assisted options?
TaxBuddy offers a dual approach to tax filing: self-filing for those confident in managing their own returns, and expert-assisted plans for those seeking guided help. The platform provides AI-powered tools for self-filing, while its expert-led services include personalized reviews, deduction optimization, and error-proof submissions. This flexibility allows users to switch between modes based on complexity or comfort level.
Q2. Which is the best site to file ITR?
For accuracy, simplicity, and post-filing support, TaxBuddy stands out as one of the most reliable platforms for filing income tax returns in India. It combines automated features with human expert validation, ensuring minimal errors and maximum compliance. Trusted by over a million users, it caters to both salaried individuals and business professionals with tailored solutions.
Q3. Where to file an income tax return?
You can file your income tax return either through the official Income Tax Department portal (incometax.gov.in) or through authorized e-return intermediaries like TaxBuddy. As an ERI recognized by the Government of India, TaxBuddy provides a secure and user-friendly interface, with step-by-step assistance, integrated document uploads, and real-time validations—ideal for avoiding common mistakes during filing.
Q4. Can I claim both HRA and LTA in the same financial year?
Yes, claiming both HRA and LTA in the same financial year is allowed if they are part of your salary structure and you’ve opted for the old tax regime. There are no restrictions on combining these exemptions, but each must be supported with valid documentation and correctly reported in the ITR. Proper alignment with Form 16 helps ensure claims are not flagged during processing.
Q5. What happens if I forget to submit HRA or LTA proofs to my employer?
You can still claim HRA and LTA while filing your income tax return, even if the proofs weren’t submitted to your employer. However, these exemptions won’t reflect in your Form 16. When claiming directly in ITR, ensure you retain all supporting documents—such as rent receipts, travel tickets, and agreements—for at least 6 years. The tax department may request them in case of scrutiny.
Q6. Is LTA allowed for international travel?
No, Leave Travel Allowance (LTA) is strictly limited to domestic travel within India. International journeys, regardless of destination or cost, do not qualify for LTA exemption under Section 10(5). Even if partially domestic, any leg of international travel disqualifies the entire claim. Stick to within-India travel and ensure expenses meet the allowed mode and route criteria.
Q7. How is HRA exemption calculated?
HRA exemption is calculated using the least of the following three:
Actual HRA received from the employer
50% of basic salary + DA (for metro cities) or 40% for non-metros
Rent paid minus 10% of basic salary + DA
This formula ensures only the justified portion of HRA is exempt. The rest is added back to taxable income. Accurate salary breakup and rent figures are essential for proper computation.
Q8. What documents do I need for HRA?
To claim HRA exemption, you need:
Monthly or quarterly rent receipts signed by the landlord
Rental agreement stating rent amount and duration
PAN of the landlord (mandatory if rent exceeds ₹1 lakh per year)
Form 12BB if claiming through employer
These documents must be retained even if not uploaded at the time of ITR filing.
Q9. Can I claim LTA in the next financial year if I missed it this year?
No, LTA cannot be claimed in the next financial year unless it falls within the same 4-year block and qualifies under the carry-over rule. The tax law permits only two LTA claims per block, and if you miss using one, you can carry it forward only to the first year of the next block, not beyond. For the 2022–2025 block, any missed journey must be claimed in FY 2025–26.
Q10. What triggers a tax notice for LTA or HRA claims?
Tax notices are typically triggered by:
Mismatches between Form 16 and ITR entries
Claiming exemptions not supported by documents
Claiming LTA for international travel
Failing to report the landlord's PAN when required
Entering incorrect figures or claiming beyond limits
To reduce the chances of receiving a notice, always retain proper proofs, double-check entries, and use platforms like TaxBuddy that validate each step.
Q11. What block year applies for LTA now?
The current LTA block is from 2022 to 2025. Employees are allowed to claim LTA exemption for two domestic journeys made during this period. The claims must comply with travel mode restrictions and must be supported by valid tickets or invoices. If a claim is missed during this block, only one journey can be carried forward to FY 2025–26.
Q12. Can TaxBuddy help me avoid tax notices while filing?
Yes. TaxBuddy’s platform offers built-in validation systems that flag incorrect claims, missed documents, and discrepancies with Form 16 before submission. Their mobile app allows users to store rent receipts, travel documents, and Form 12BB in one place. Combined with AI-driven checks and expert reviews, TaxBuddy ensures your ITR filing is accurate, compliant, and free from common red flags that usually trigger tax notices.
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