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
Mr.Rais, Where is your place of work, in govt or private, gross salary is incl: DA or excl?
Sir,
I have The following details in respect of my salary. Please guide me how to calculate HRA?
TOTAL SALARY 378000
DA 78000
HRA REC. 22000(P.A.)
RENT PAID 24000(P.A.)
Mr.Raj: Your inputs are inadequate. The amount you pay to the company for the accommodation is called rent and not HRA. HRA is the amount one receives from the employer towards accommodation. Coming to your specifics; if you are getting HRA when you are not taking the company accommodation, (calculate the HRA received (financial year), rent paid (to the empoyer for quarter or for the place your family is staying and compute the deduction as per standard rule). If you are not getting any HRA , you cannot claim any relief towards payment of rent (to whomever it may be.
Mr.S.Agarwal:Strictly speaking if you dont get HRA but free accommodation at the place of work that cannot be considered as a perquisite. Accommodation guest house or otherwise can be construed as rent free accommodation. If you are getting HRA and rent free accommodation, you have to pay tax for HRA without any deduction.
Sir,I have been deputed from one location to other location so im shifted my family to my native place(in brother house),earlier i was staying in company quaters and hra deducted by company from my salary and now im surrendered the company quarters and presentely company giving me free accomadation, in this case can i show rent paid of my native place.
In case an employee is occupying the guest house of the employer as accommodation.
What will be the Tax Treatment for the same. whether it will be considered under HRA or as a perquisite.
And to the above answer what will be the Tax Liability for the Employee?
Thank you Sudarshana. This info would help.
Sanjib: You have to indicate the PAN of the owner if the rent is above 1,00,000/= per year; i.e. above Rs.8000/= per month. If the receipt is above 1 lakh per year, pl take a xerox copy of the PAN from the owner.
If the owner is not giving xerox copy or original PAN, the rent is much above Rs.8000/= and the employer is un-yielding no need to worry. You can give these details while filing your IT return and get the refund.
My employer is asking PAN CARD of the owner copy for giving the HRA tax benefit. Is it no that if Owner gives a rent receipt and mention his PAN number + address will do?
Aswani kumar: Not to be included. Those allowances that forms part of the salary for the calculation of retirement benefit is to be included. You should n ot include the DA also unless it is DP (Dearness Pay, treated as Basic salary).
sir,
i m an govt employee and getting fixed medical allowance rs 500 per month. I want to ask whether this need to be included in gross salary for calculating HRA exemption
thanking u
ashwani
You can claim exemption where you are staying and paying the rent out of your income.
I am paying rent for two seperate houses
1. I am staying
2. Where my parents are staying.
How do I claim HRA exemption for the above two cases ?
I m in uluberia corporation area .HRA persentage how much?
All okey except definition of Salary; Salary should not be taken as Basic plus DA. DA is a variable depending upon the inflation and can go down or up. Strictly speaking it is BASIC any pay that is considered for payment of retirement benefit etc. In the example Rs.19,000 will be exempt from income tax.
Useful information.
AS PER THE CLARIFICATION I WANT TO KNOW IF ANY COMPANY DON’T GIVE THE DA & GIVE SOME SPECIAL ALLOWANCE, LTA .
SO IN THIS CASE HRA CALCULATION IN BASIC SALARY OR THE TOTAL SALARY (INCLUDING – BASIC SALARY =SPECIAL ALLOWANCE +LTA)
PLS CONFIRM
Individual not get HRA but individual staying with family with rented house so how get exemption from income tax and how much amount eligible for house rent
Hi,
I have changed job in month of May. Left previous company on 9th and joined new on 19th.
My previous employer and my new employer both have paid me pro-rata HRA for # of days I have been with company. But for Month of MAY both firms are not considering HRA exemption in Tax Calculation.
Can I claim eligible HRA deduction u/s 10(13A) for month of MAY when I file returns next year?
Thanks in Advance
Hello Sir ,
I am staying in Mumbai but my family is in vishakapatnam, should I claim both rents or either of one . Could you please clarify .
what is the percentage of BASIC HRA DA OTHER ALLOWANCES is to be divide on gross salary.
I am an employee, I own a home, yet i stay in a rented property in the same city as the home I own. I have not rented my owned property. In such a case is the HRA deduction legitimate and allowable under tax laws?
Sir,
I did not claim HRA rent in previous financial year 2013-14 FY, for some personal reasons and got entire tax paid over. Can I claim the same in pre dispensation for this year.
I am staying in the same rented house as of now too.
Please advise.
As per my Salary Structure Basic = Rs. 12000 p.m.; HRA = 6000 p.m.; Conveyance = 800 p.m.; Supplementary Allowance = Rs. 16200 p.m.
My question is to have the Tax exemption as per IT HRA rules, shall i have to present the Rental agreement along with my Rent receipts. Acually I am staying in a rented house without having the Rent Agreement. And the company is asking me for the Rent Agreemtn along wiht Rent receipts.
Please guide me
Regards
CHANDRA SHEKHAR
i am a salaried employee in a pvt ltd company and getting HRA of RS. 126591 annually, and my company has not deduct the HRA claim due to delay submitted Rent receipts at my end.i want to claim deduction of HRA as i am paying rent for 7000pm as rent & also told me which part is included for salary under HRA(BONUS 46251+BASIC 99465+CONVEYANCE 9600+EDUCATION ALLOWANCE 2400 +INCENTIVE 120). HOW can I claim this deduction under HRA because deduction u/s 10 has not available in ITR 1 when I filled return by online.
Hi,
I am working in an INGO based in Delhi, my salary includes HRA and till Feb 2014, I was living in Delhi in a rented flat. Since March I have been transferred to Kathmandu Nepal, where I also live in a rented flat. I have a queries regarding my Tax liability;
Can I submit my House rent receipts which i paid in Nepal. If not how much I have to pay tax. Is there any exemption slab, my HRA is 18000 per month.
My Salary and other benefits are still paid by Delhi office.
Thanks in Advance
Best Regards
Mudasir
My son is employed & staying in same flat owned by me. He gives me rent .In order to claim tax exemption kindly guide me on following.
1. Whether rent is to be given by cheque only or by cash also allowed.
2. Whether rent has to be given every month or can be given in arrears for say 3/4 months or in advance for say 3/4 months.
3 Whether it is necessary to enter into a leave- licence Agreement or paying guest agreement.
4. Any other care to be taken to ensure tax exemption.
5 The PAN Number is required for total Annual Rent of above 1 Lac. If Rent of 20000 pm is paid for only 4 months in a year then total rent would be 80000 in Fin.Year. PAN is must in this or not.
Kindly guide me
Thanks & Regards
Prakash Shanbhag
9769593432
tell me all pay heads of payroll clearly
Sir mujhe HRA calculate karna nahi aata?
my basic salary 225185 i leave in ahmedabad h rent paid 60000 who deducted HRA Amount on itr my company are not sow to HRA company sow only basic salary
my basic salary 225185 i leave in ahmedabad h rent paid 60000 who deducted HRA Amount on itr
i am retired from armed forces and re employed person. how can I reinvest my retirement benefits through me or my spouse to get maximum tax benefit. Can I form a HUF.
My friend is a Govt Eployee. er Salry is as follows:+
A. BASIC PAY 214320.00
B. DA 112877.00
C. HRA 3000.00
RESIDING IN HUSPENTS PPARENTS HOUSE IN THRISSUR, JOB IS WITHIN 10KM
CAN SHE CLAIM ANY HRA
Hi,
I left my company in sept 2013 and joined new company.
My previous company did not provide HRA benefit in my form 16. Current company has shown HRA for half period.
Can i claim HRA for full Year. what should i do?
Regards
Hi,
My Salary Slip include only 4 items
1. Basic pay + Grade Pay
2. Non Practice Allowance
3. DA
4. CCA
In this case can i claim benefit under section 10 like
exemption for rent paid
LTA
Medical Allowance
Conveyance etc
Thanks
I have left previous employer in the month of Aug’13. Previous employer shown HRA on salary slip but considered as taxable income,
Second Employer doesn’t provided any deduction from slary lik transport allowance, children education allowance and HRA allowance.
Can I get deduct these from total income while doing tax calculation.
Hi,
I have not provided rent receipts to my employer previous employer as I have left that organization in JUN ’13. However, I provided rent slip to existing employer for this quarter as well. Now my previous employer has made HRA as taxable in form 16. Now, can I simply claim HRA exemption through self assessment while filing income tax return or there is any other process.
Hi,
I have not provided the rent receipts to my employer as I had been abroad during the time of submission and I want to claim HRA exemption when I file the return.
How do I now submit the HRA evidence/proof?
Do I enclose it with the ITR-V that I mail to CPC? However, I remember reading somewhere to not enclose the ITR-V with anything else..
This has reference to the new rule for availing HRA exemption. Since I was unable to submit the PAN Card details of my landlord in time my employer has not given the exempton for HRA in my tax calculations for the current financial year. The entire benefit availed by me in the previous months has been reversed and huge deductions made from my salary for February and March.
Pls advise the course of action for me to recover the tax deducted from me on account of HRA.
Sir both of us (husband & wife) r govt employee he plz btaye ki dono ko HRA milega ya nahi plz full details de yadi nahi to condition bataye
Hello Sir ,
I am staying in Bangalore but my family is in Chennai, should I claim both rents or either of one . Could you please clarify .
This has reference to the new rule for availing HRA exemption. Since I was unable to submit the PAN Card details of my landlord in time my employer has not given the exempton for HRA in my tax calculations for the current financial year. The entire benefit availed by me in the previous months has been reversed and huge deductions made from my salary for February and March.
Pls advise the course of action for me to recover the tax deducted from me on account of HRA.
– Ragu
This has reference to the new rule for availing HRA exemption. Since I was unable to submit the PAN Card details of my landlord in time my employer has not given the exempton for HRA in my tax calculations for the current financial year. The entire benefit availed by me in the previous months has been reversed and huge deductions made from my salary for February and March.
Pls advise the course of action for me to recover the tax deducted from me on account of HRA.
Prince
I feel there is something wrong in info… Because you can avail benefit of HRA on basic salary only not on the term Salary…
Loot of Well knowledge for me….
Thank You.. Mr. Tax Guru
Me ,my son & my daughter in law are co owners for buying a house. I am the 1st owner as I have to reinvest the money I got thru sale of other property. Home loan is now raised for balance money by my son & di/l for buying the house . They are asking me to bear a portion of EMI as rental to them.Am I eligible for claiming HRA exemption in this case?
Sir i am recruited as agriculture officer through PCS in Livestock Department D.I. Khan. From April i am transferred to peshawar on temperorary basis but still house rent is deducted from my salary. Is this legal or nor not. as i had been alloted Banglow at D.I. Khan without any requested and orders have been imposed on me from July 2013 uptill now. As i am drawing my salary from D.I. Khan and working in peshawar. kindly guide me on given email address
Azam_180@yahoo.com
Yes, After calculating HRA exemption by considering 3 said conditions of in the Section 10 (13A) and the result of the application of section 10(13A) comes to “ZERO” ie., which ever is lower of 3 conditions of HRA . Then HRA amount exempt u/s 10 (13A) will be “ZERO”
If difference between rent paid and 10% of basic is Zero, then is a person not eligible for any exemption in HRA?
Lets say one’s basic is Rs 50000 and rent of Rs 5000 is paid, then rent paid -10% of basic is zero.What exemption is available in such a case.
Kindly clarify.
Thanks in anticipation.
My annual taxable income is nearly Rs. 12 lakhs. I pay a rent of Rs. 26000/- per month for an accommodation in NCR region and receive a rent of Rs. 18000/- per month for a house owned by me in NCR(jointly with my wife) for which I also have taken a House loan and pay monthly EMIs with annual outgo of Rs. 1,60,000/- as principal and Rs. 2,00,000/- as interest. I receive an HRA of Rs. 12000/- from my employer. Can you provide a calculation sheet for calculating my tax liability. How much house maintenance charges out of the rent received are deductible from the rent received to be shown as income. Which income tax form is to be filed for this?
If the employee gets hra, at the same time he gets free accommodation from company,so the employee pays hra for the rent of her wife living in other city,will he able to get deduction of hra?????