Calculate your House Rent Allowance (HRA) exemption know HRA exemption Calculation Formula and download HRA Calculator in excel format for easy calculation of exempt HRA Allowance out of Total HRA received by Salaried Assessee.
Employees generally receive a house rent allowance (HRA) from their employers. This is a part of the salary package, in accordance with the terms and conditions of employment. HRA is given to meet thse cost of a rented house taken by the employee for his stay.The Income Tax Act allows for deduction in respect of the HRA paid to employees. The exemption on HRA is covered under Section 10(13A) of the Income Tax Act and Rule 2A of the Income Tax Rules. It is to be noted that the entire HRA is not deductible. HRA is an allowance and is subject to income tax.
An employee can claim exemption on his House Rent Allowance (HRA) under the Income Tax Act if he stays in a rented house and is in receipt of HRA from his employer. In order to claim the deduction, an employee must actually pay rent for the house which he occupies.
The rented premises must not be owned by him. In case one stays in an own house, nothing is deductible and the entire amount of HRA received is subject to tax. As long as the rented house is not owned by the assessee, the exemption of HRA will be available up to the the minimum of the following three options:
1. Actual House Rent Allowance (HRA) received from your employer
2. Actual house rent paid by you minus 10% of your basic salary
3. 50% of your basic salary if you live in a metro or 40% of your basic salary if you live in a non-metro
This minimum of above is allowed as income tax exemption on house rent allowance.
Salary here means basic salary which includes dearness allowance if the terms of employment provide for it, and commission based on a fixed percentage of turnover achieved by the employee. The deduction will be available only for the period during which the rented house is occupied by the employee and not for any period after that.
Page Contents
- Meaning of Salary for calculation the exemption of HRA
- Examples for calculation of exemption/deduction of HRA
- Frequently Asked Questions on House Rent Allowance (HRA):-
- 1. How is HRA accounted for in the case of a salaried individual and a self-employed professional?
- 2. What are the dependent factors in calculating HRA for the salaried individual?
- 3. Can I pay rent to my parents or spouse to avail HRA benefits?
- 4. Do I need to submit any proof for my HRA claim?
- 5. Can I simultaneously avail tax benefits on my home loan and HRA?
- EXTRACT OF RULE 2A OF INCOME TAX RULES I.E. HRA EXEMPTION RULES
Meaning of Salary for calculation the exemption of HRA
- Salary means (Basic + D.A + Commission based on fixed percentage on turnover).
- Salary is to be taken on due basis in respect of the period during which the period accommodation is occupied by the employee in the previous year.
Examples for calculation of exemption/deduction of HRA
X has received following amount during the previous year.
1. Basic Salary – Rs. (5000*12) – Rs. 60,000/-
2. Dearness Allowance (D.A) – Rs. (1000*12) – Rs. 12000/-
3. House Rent Allowance (H.R.A.) – Rs. (2000*12) – Rs. 24000/-
4. Actual Rent Paid – Rs.(2000*12) – Rs. 24000/-
Calculation
The minimum of the following amount shall be exempt
- Actual HRA received (2000*12) – Rs. 24000/-
- Rent Paid in excess of 10% of salary ( 24000-7200) – Rs. 16800
- 40% of Salary – Rs. 28800/-
Therefore, Rs. 16800 shall be exempt and the balance Rs. 7200 shall be included in gross salary.
Frequently Asked Questions on House Rent Allowance (HRA):-
1. How is HRA accounted for in the case of a salaried individual and a self-employed professional?
HRA (house rent allowance) is accounted for in the case of salaried people under Section 10 (13A) of Income Tax Act, 1961, in accordance with rule 2A of Income Tax Rules (HRA Exemption Rules). On the other hand, self-employed professionals cannot be considered for HRA exemption under this act, as they do not earn a salary. However, they can claim benefits on the house rent expenses incurred under section 80GG, which resembles section to 10(13A) but is subject to certain conditions.
2. What are the dependent factors in calculating HRA for the salaried individual?
When you are calculating HRA for tax exemption, you take into consideration four aspects which includes salary, HRA received, the actual rent paid and where you reside, i.e., if it is a metro or non-metro. If these aspects remain constant through the year, then tax exemption is calculated as a whole annually, if this is subject to change, as in a rent hike, pay hike or shift in residence etc., then it is calculated on a monthly basis. It is usually rare for all the values to remain constant in a financial year.
The place of residence is significant in HRA calculation as for a metro the tax exemption for HRA is 50% of the basic salary while for non-metros it is 40% of the basic salary. This holds true especially when you work at a metro and reside at a non-metro. In this case, your city of residence only will be considered for calculating your HRA.
3. Can I pay rent to my parents or spouse to avail HRA benefits?
You can pay rent to your parents, however, they need to pay tax on the same or account the same in calculating their taxable income.
On the other hand, you cannot pay rent to your spouse. In view of the relationship when you take up residence together, you are expected to do so and hence such a transaction does not bear merit under tax laws. Sham transactions can only spell trouble under scrutiny, so steer clear of these.
4. Do I need to submit any proof for my HRA claim?
You need to submit proof of rent paid through rent receipts, for which only two need to be submitted, one for the beginning of the year and one towards the end of the financial year. It should have a one rupee revenue stamp affixed with the signature of the person who has received the rent, along with other details such as the rented residence address, rent paid, name of the person who rents it etc.
5. Can I simultaneously avail tax benefits on my home loan and HRA?
The tax benefits for home loan and HRA are two separate entities and have no direct bearing on each other. As long as you are paying rent for an accommodation, you can claim tax benefits on the HRA component of your salary, while also availing tax benefits on your home loan. This could be the case if your own home is rented out or you work from another city etc.
EXTRACT OF RULE 2A OF INCOME TAX RULES I.E. HRA EXEMPTION RULES
[Limits for the purposes of section 10(13A) .
2A. The amount which is not to be included in the total income of an assessee in respect of the special allowance referred to in clause (13A) of section 10 shall be—
(a) the actual amount of such allowance received by the assessee in respect of the relevant period; or
(b) the amount by which the expenditure actually incurred by the assessee in payment of rent in respect of residential accommodation occupied by him exceeds one-tenth of the amount of salary due to the assessee in respect of the relevant period; or
(c) an amount equal to—
(i) where such accommodation is situate at Bombay, Calcutta, Delhi or Madras, one-half of the amount of salary due to the assessee in respect of the relevant period; and
(ii) where such accommodation is situate at any other place, two-fifth of the amount of salary due to the assessee in respect of the relevant period,]
whichever is the least.
Explanation : In this rule—
(i) “salary” shall have the meaning assigned to it in clause (h) of rule 2 of Part A of the Fourth Schedule;
(ii) “relevant period” means the period during which the said accommodation was occupied by the assessee during the previous year.]
Image courtesy of Salvatore Vuono at FreeDigitalPhotos.net
(Republished with amendments)
Author Bio
SIR,
HERE IF HRA IS BASED ON BASIC SALARY THEN HRA FOR ILL.B WILL RS.550 ( 25% OF BASIC SALARY)
An Employee getting the following from Apr 10 to Dec 10
Illustration-A
1. Basic 1000 + DA 250 = 1250
2. HRA = Rs.500
3. Actual Rent Paid = Rs.700
In this case the employee eligible for HRA of Rs.500 (least amount)
The same employee getting the following from Jan 11 to Mar 11
Illustration-B
1. Basic 1100 + DA 275 = 1375
2. HRA = Rs.550
3. Actual Rent Paid = Rs.700
In this case is the employee eligble for Rs.550 or Rs.500(as per the Illustration-A)
Since the employee may not pay the Increased HRA (of Rs.50) to the Owner of his house.
Kindly clarify
Ramesh P.
can I claim HRA exemption and Housing loan deduction in the case of my family stay in my own house at other city.
dear sir,
My question is : I Rented in Govt Employee House, in past 3 years ago, only one room is taken to 14*10 Size, i given to rent is 1500/- p.m., (at present my HRA is 1898), but sir, in this running month he told to me your RENT is Increasing, so sir please give me my reply , is Actual Rent I given to him in just future.
thanking you.
I stay in a rented house which is near to my workplace. My family live in Metro in rented home which is paid by me. I do go every weekend to meet my family. CAn I get HR expemtion for both the houses rent or not or will I get only for one house?
Dennis
IF AN EMPILOY WANTS TO TAKE REBATE FOR HIS RENT PAID BY HIM . WHAT SHOULD THIS EMPLOY PRODUCE DOCUMENTS TO THE EMPLOYER FOR THIS REBATE !
SAY PANKAJ BANSAL LDC GOVT GIRLS SR SEC SCHOOL GANGAPURCITY DISS-SWAIMADOPUR, RAJASTHAN 9950622028
in salary income if the employer is giving HR to Employee & emplyee having a hosing loan then we get deduction of both HRA & Hosing loan or not
please send me format for rent sheet (payee) for tds because i am living in rented house. i have not format. my landlord has also not this format.pls send me on
deep230596@gmail.com
No Such Rule
is a central government employee bound to stay within 8 km
from the place of his posting/headquarter
If employee have houseing loan and he/she is staying in some other city where he/she is paying rent too, how to consider in income tax calculation
whether an employee need to give the PAN no of the person to whom he is giving rent to claim HRA
whether thane city consider as part of mumbai(metro city) for HRA calculation?
IF IAM STAYING IN MY MOTHERS OWN HOUSE FOR RENT, CAN I CLAIM FOR HRA EXEMPTION
sir,
my sister is software engineer.she gets hra & her hr is demanding lanlord pan. landlord is not producing his pan. so plz reply me the solution of this probem as soon as .
tahnk u
Sir ,
I want to know what is the max. limit of HRA rebate allowed in terms of amount.ie is there any limit on 50% basic ?
Sir,
I stay in my own flat. Can tenant and owner stay in same flat? I will declare income from rent in my IT returns and also claim tax rebate on the interst paid for the homeloan.
if the HRA received & 50 % of salary is same amount what is the calculation
Pls clarify if Grade Pay is to be taken into calculation for the purpose of salary for central govt. employees while determining the exemption of HRA?
Madan
Do we have to have Rent Agreement to get exemption or we can get it by providing Rent Receipt only??
Is there any document require of the opposite party like TDS or anything??
Please guide me.
I own my house, but it is under repair, I get HRA from employer Rs.3,000/- p.m. can i claim exemption of HRA.
Is grade pay included in the salary for calculation of exemption of HRA from income tax?
Pls advise.
All are welcome to throw light on this.
Madan
I heard that Rs. 3000/month can be showed as House rent without producing Bills and House Rent Agreement. Can you please me know how true this information is?
Sir,
I am receipt of HRA as per my service condition and counted as income as a part of salary income because of living in self house in my name. I used to spend few thousand for petty repairs on it. Whether the repair amount is admissible for HRA. pl advice.
I have a flat in Bangalore registered jointly in the name of my mother and my wife. I am a central govt employee and moving into bangalore. I wish to stay in that house and like and give rent to my mother by cheque and get a receipt. My parents are not living with me and they are living in other place. Can I draw HRA and claim deduction for the rent I pay?. How much will be applicable?
-AP Kannan
Hello Sir,
I have recently purchased a flat and have paid up about 1/3rd of its value and the balance is to be paid up in the form of EMI’s for 5 years with interest to the builder. Would I be entitled to claim u/s 24 and section 80C of the Income Tax Act.
Hi,
You can claim the HRA benefit and to claim the Interest you need to occupy the house once the construction is complete. After occupying the house the interest paid till date can be claimed for the next 5 yrs as 1/5 of the amount.
Hello Sir,
I have flat at Chennai and is about 6 km away from my duty place. It is under construction and iam staying in a rented house. i have availed home loan and paying EMI. Can claim both HRA exemption and avail the interest component benefit since the flat is under construction and iam staying in a rented house
pls heplp me for it deduction interest on housing loan. i have lic 100000/- & i have pay interest on housing loan 88000/- my total exemption is 188000/-for it dep.
Hello Sir,
I have a query related to home loan & HRA claim. Sir, I have booked a flat in Supertech, Noida Extension (Basically it is in Greater Noida). I am staying on rent in Sec-71, Noida. Construction did not start yet and I am looking for home loan. Technically, distance from my rented place and this supertech flat is only 8 km. Am I eligible to claim HRA & home loan both and how to claim it?
Thank you,
Shalini Singh
My income is under the tax exemption limit. So when I am filling the ITR-1 form, in section 23, do I need to fill the employers details if there isn’t any TDS deducted from my salary ? So in that case if my form there won’t be any information of my employer, so will that do ?
I am a central govt employee. I have two queries :-
(1) I have received HRA dues for the period Jul-Mar 2008 in the FY 2009-10. I have also received HRA for the period Apr-Oct 09 in the same FY year. My query is whether I can claim exemption of HRA for both the periods in the IT Return for the AY 2010-11? ( I believe I should be doing so because I have received the dues in the current FY, but a confirmation from your side would be welcome)
(2) I would like to know at which para/place in the ITR-1 Form do we need to mention the HRA exempt income and secondly are the details of the calculation of HRA exempt income, to be attached as a separate sheet to the ITR. If so is there a particular format for the same? I have calculated the details month wise because of change in basic pay and D.A. during the year.
Thanks in antic
Read more: https://www.taxguru.in/income-tax/house-rent-allowance-hra-taxability-and-workingcalculation-of-taxable-hra.html#ixzz0ts72F9fu
1- I HAD FILED MY ITR II FOR FINANCIAL YEAR 2008-2009 ON 30/07/09 AND I WAS TO GET RFUND BECAUSE OF MY HOME LOAN AND RELIEF U/S-89 BUT I HAVE NOT RECEIVED REFUND TILL NOW AND IF I FILE REVISED ITR II FOR THE SAME THEN WHICH FINANCIAL I HAVE SELECT AND WHAT ABOUT THE INCOME FIGURES ,WILL IT SAME AS IN ORIGINAL ITR OF 2008-2009.
2- I DID NOT DECLARE MY HRA TO MY EMPLOYER IN 2009-2010,NOW I WANT SHOW ALONG WITH ITR THEN WHERE TO ADJUST HRA FIGURE IN INCOME.
HRA calculation/exemption
My break up of monthly salary is Basic 29400 HRA 11760 Others 15300. In the previous year I was on unpaid medical leave for about 4 months and did not get any salary during this period. But I had to pay my rent for the full year for the house where I stay which is Rs 9500 per month. Can I claim exemption for the full year or what amount is eligible for exemption.
You can reply on my email also.
Regards,
Natarajan
a person live in uttrakhand how much deduction can he take from HRA
hello, i have a query:-
if any employee receive HRA from his employer,is it essential to submit the rent receipts by employee to his employer for claiming exemption for HRA u/s 10 of i.tax.?
hi
i have a query my client is receiving hra of rs 66999 p.a and he is paying rent of rs 9000 to his father the house in which he stay is of his father here can he claim exemption for that u/s 10(13a) or he should go for deductation of rent paid u/s 80
Can employee claim exemption of hra if he is staying in a hotel and produce hotel bills for exemption
I am receiving house rent allowance and am not paying any house rent since I reside with my parents. Kindly let me know the Tax aspect on the HRA received by me.
i have a quer about some shares transcations…
i have purchased shares of gtl infra ltd. and shown as closing stock as on 31.03.2009 (as business ead applies in shares) and in june 2009 i got 60 bonus shares.
so i want to know that these bonus shares are part of my investment (say capital gain / loss head applies) or it will be added in my stock qty. with nil value of bonus shares.
PLEASE REPLY ME SOON..
I M VERY THANKFUL TO YUO ALL.
I want to know whether deduction under this head is applicable if HRA is not paid seperately.
DEAR FRIEND
PLEASE SEND THE PF RETURN EXCEL FORMAT AND HOW TO PREPARE THE ,WHAT ARE THE IS
PLZE SEND THIS ONE TO OUR MAIL rajivg202@yahoo.com
Can i pay the rent to my wife. the house is in her name. whether the claim of rebate will be legal.
Can u please tell me how the “10%” (in case of HRA) is fixed by the department i.e. on what basis?
I Have purchased a plot and paid a stamp duty in 2009… no home loan taken…. currently living on rent and doing construction on plot…
CAn I claim HRA deduction & stamp duty benfir under section 80C….
it is an excellent website for gaining the knowledge. especially to the students
I have a query :-
In case a person occupies two rented accmodations, one at the place where he is employed say at Haridwar and another at place where his/her family is residing say at Delhi & where he/she visits periodically, whether the entire rent paid is eligible for calculating HRA exemption. Any case law or circular on this issue.
The person can claim the interest on loan as deduction u/s 24 (upto a maximum of Rs. 150,000/-) from the income from House property . Secondly, the repayment of principal amount of loan can be claimed as deduction u/s 80C of the Income Tax Act.
what would happen to a person who has purchased the house/ property on loan? He is not the owner of the house at present as it is mortguaged to the bank. He is paying monthly EMI. (The house is self occupiedby him)?
I am a central govt employee. I have two queries :-
(1) I have received HRA dues for the period Jul-Mar 2008 in the FY 2009-10. I have also received HRA for the period Apr-Oct 09 in the same FY year. My query is whether I can claim exemption of HRA for both the periods in the IT Return for the AY 2010-11? ( I believe I should be doing so because I have received the dues in the current FY, but a confirmation from your side would be welcome)
(2) I would like to know at which para/place in the ITR-1 Form do we need to mention the HRA exempt income and secondly are the details of the calculation of HRA exempt income, to be attached as a separate sheet to the ITR. If so is there a particular format for the same? I have calculated the details month wise because of change in basic pay and D.A. during the year.
Thanks in anticipation.