Government quarter allotted to your spouse? Can you still claim HRA? Finance ministry clears the air
The Finance Ministry has clarified that a Central government employee cannot claim House Rent Allowance (HRA) if their spouse has been allotted government accommodation at the same station, reiterating that HRA is payable only when an employee incurs rental expenses. The clarification, issued in a written reply in the Rajya Sabha, reinforces the existing policy and confirms that the government is not considering any proposal to review the rule for government employee couples.
- Aug 7, 2026,
- Updated Aug 7, 2026 5:25 AM IST
ITR filing 2026: The Finance Ministry has clarified that a Central government employee cannot claim House Rent Allowance (HRA) if their spouse has been allotted government accommodation at the same station, even if both are government servants.
Replying to an unstarred question in the Rajya Sabha, Minister of State for Finance Pankaj Choudhary said HRA is meant for employees who are not provided government accommodation and incur expenditure on hiring residential accommodation. If either spouse has been allotted official accommodation at the same station, the family is treated as having been provided housing, making the other spouse ineligible for HRA.
Why is HRA not allowed?
The government explained that HRA is a compensatory allowance designed to offset the cost of renting a house when official accommodation is unavailable.
According to the Finance Ministry, when both spouses are Central government employees posted at the same station and either of them is allotted government accommodation, the family is considered to have already been provided residential accommodation. As a result, the other spouse is not regarded as incurring any expenditure on rent.
The ministry stated that "consequently, no expenditure is incurred by the other spouse on accommodation," and therefore HRA is not admissible. The clarification reiterates the existing policy and does not introduce any new rule.
When can government employee couples claim HRA?
The clarification also explains the circumstances in which HRA can or cannot be claimed.
If neither spouse has been allotted government accommodation, they may be eligible to receive HRA in accordance with the applicable service rules.
However, if either spouse is allotted government accommodation at the same place of posting, the other spouse cannot claim HRA, regardless of whether both are Central government employees. The restriction is based on the principle that the family has already been provided official residential accommodation.
The Finance Ministry also informed Parliament that it has not received any representations from government employees or service associations seeking a review of the existing policy. Accordingly, there is no proposal under consideration to amend the rule.
ALSO READ: ITR filing 2026: Tax Audit Season is here -- businesses, professionals: Who needs audit this month?
How HRA works
Apart from being a salary allowance, HRA can also provide a tax benefit under Section 10(13A) of the Income-tax Act, provided the employee opts for the old tax regime.
To claim the exemption, an individual must be a salaried employee receiving HRA as part of the salary package and must be living in a rented house that they do not own. The tax exemption is available only under the old tax regime.
The exempt amount is calculated as the lowest of three values:
- Actual HRA received;
- Rent paid minus 10% of basic salary; or
- 50% of basic salary for employees living in metro cities (40% for non-metro cities).
Employees generally need a rent agreement, rent receipts, and the landlord's PAN if the annual rent exceeds ₹1 lakh. The exemption can be claimed by submitting these documents to the employer during the financial year or directly while filing the Income Tax Return (ITR) if it was not claimed earlier.
MUST READ: Section 143(1) to 245: Decoding the 7 income tax notices every taxpayer should know
What the clarification means
The Finance Ministry's clarification relates specifically to the admissibility of HRA for Central government employees where official accommodation has been allotted to either spouse at the same station. It does not alter the income tax provisions governing HRA exemption under Section 10(13A).
For government employee couples, the key takeaway is that HRA depends on whether the family has already been provided government accommodation. For taxpayers in general, the tax exemption on HRA continues to be governed by the Income-tax Act and remains available, subject to eligibility conditions and the choice of the old tax regime.
ITR filing 2026: The Finance Ministry has clarified that a Central government employee cannot claim House Rent Allowance (HRA) if their spouse has been allotted government accommodation at the same station, even if both are government servants.
Replying to an unstarred question in the Rajya Sabha, Minister of State for Finance Pankaj Choudhary said HRA is meant for employees who are not provided government accommodation and incur expenditure on hiring residential accommodation. If either spouse has been allotted official accommodation at the same station, the family is treated as having been provided housing, making the other spouse ineligible for HRA.
Why is HRA not allowed?
The government explained that HRA is a compensatory allowance designed to offset the cost of renting a house when official accommodation is unavailable.
According to the Finance Ministry, when both spouses are Central government employees posted at the same station and either of them is allotted government accommodation, the family is considered to have already been provided residential accommodation. As a result, the other spouse is not regarded as incurring any expenditure on rent.
The ministry stated that "consequently, no expenditure is incurred by the other spouse on accommodation," and therefore HRA is not admissible. The clarification reiterates the existing policy and does not introduce any new rule.
When can government employee couples claim HRA?
The clarification also explains the circumstances in which HRA can or cannot be claimed.
If neither spouse has been allotted government accommodation, they may be eligible to receive HRA in accordance with the applicable service rules.
However, if either spouse is allotted government accommodation at the same place of posting, the other spouse cannot claim HRA, regardless of whether both are Central government employees. The restriction is based on the principle that the family has already been provided official residential accommodation.
The Finance Ministry also informed Parliament that it has not received any representations from government employees or service associations seeking a review of the existing policy. Accordingly, there is no proposal under consideration to amend the rule.
ALSO READ: ITR filing 2026: Tax Audit Season is here -- businesses, professionals: Who needs audit this month?
How HRA works
Apart from being a salary allowance, HRA can also provide a tax benefit under Section 10(13A) of the Income-tax Act, provided the employee opts for the old tax regime.
To claim the exemption, an individual must be a salaried employee receiving HRA as part of the salary package and must be living in a rented house that they do not own. The tax exemption is available only under the old tax regime.
The exempt amount is calculated as the lowest of three values:
- Actual HRA received;
- Rent paid minus 10% of basic salary; or
- 50% of basic salary for employees living in metro cities (40% for non-metro cities).
Employees generally need a rent agreement, rent receipts, and the landlord's PAN if the annual rent exceeds ₹1 lakh. The exemption can be claimed by submitting these documents to the employer during the financial year or directly while filing the Income Tax Return (ITR) if it was not claimed earlier.
MUST READ: Section 143(1) to 245: Decoding the 7 income tax notices every taxpayer should know
What the clarification means
The Finance Ministry's clarification relates specifically to the admissibility of HRA for Central government employees where official accommodation has been allotted to either spouse at the same station. It does not alter the income tax provisions governing HRA exemption under Section 10(13A).
For government employee couples, the key takeaway is that HRA depends on whether the family has already been provided government accommodation. For taxpayers in general, the tax exemption on HRA continues to be governed by the Income-tax Act and remains available, subject to eligibility conditions and the choice of the old tax regime.