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
I am working as a state government employee and my basic pay is Rs. 20740.I am residing in government rental housing. I am not getting my house rent@15% =3111 per month. Can I calculate my income tax excluding this HRA?
Sir
I am getting 60880/pm salary (Salary break up Basic-36528/-, HRA-18264/-, Conveyance-3044/-, Medical-3044/-) & actual Rent Paid of Rs.8000/pm
How many amount will exempted in Income tax
The HRA Slab defined by the Govt is absolutely looting money from middle man like me.
The calucation as per Govt HRA Slab as under:
Basic Salary 300000
HRA 150000
40% HRA on Basic Salary 120000
Actual HRA Paid 96000
Exemption available 66000 Being Non Metro
Taxable HRA 84000
Correction required on the above Slab as under:
Correction required in Slab
HRA 150000
Exemption available 96000 Minimum of HRA, 40% on Basic Pay & Actual HRA Paid
Taxable HRA 54000
If I go for calculation of HRA benefit available, I understand that I am getting benefit only for Rs. 12000/- as HRA Exemption as per below calculation
Actual HRA Paid Rs.96000/-
Taxable HRA is Rs.84000/- instead of Rs.54000/-
Benefit what I am getting from HRA is only for Rs.12000/- on furnishing House Rent Receipts, instead of Rs.42000/-
According to above correction, the rufund of TAXABLE HRA should be as under:
More Taxable HRA 30000 Excess Tax to be refundable
If Govt is not able to provide this, then the benefit of 80C to be enhanced from 150000/- to 250000/- considering increasing expenses especially on Vegitables, MILK, Tution Fees as every year Schools and Colleges are increasing Tution Fees but taxable limit is only Rs.24000/- per two children if I have to pay Tution Fees more than Rs.24000/- for an example Rs.36000/- per two children.
The HRA Slab defined by the Govt is very horrible for middle man like me.
The calucation as per Govt HRA Slab as under:
Basic Salary 300000
HRA 150000
40% HRA on Basic Salary 120000
Actual HRA Paid 96000
Exemption available 66000 Being Non Metro
Taxable HRA 84000
Correction required on the above Slab as under:
Correction required in Slab
HRA 150000
Exemption available 96000 Minimum of HRA, 40% on Basic Pay & Actual HRA Paid
Taxable HRA 54000
If I go for calculation of HRA benefit available, I understand that I am getting benefit only for Rs. 12000/- as HRA Exemption as per below calculation
Actual HRA Paid Rs.96000/-
Taxable HRA is Rs.84000/- instead of Rs.54000/-
Benefit what I am getting from HRA is only for Rs.12000/- on furnishing House Rent Receipts, instead of Rs.42000/-
According to above correction, the rufund of TAXABLE HRA should be as under:
More Taxable HRA 30000 Excess Tax to be refundable
If Govt is not able to provide this, then the benefit of 80C to be enhanced from 150000/- to 250000/- considering increasing expenses especially on Vegitables, MILK, Tution Fees as every year Schools and Colleges are increasing Tution Fees but taxable limit is only Rs.24000/- per two children if I have to pay Tution Fees more than Rs.24000/- for an example Rs.36000/- per two children.
Mr. Saurabh: Self employed and those who are not in receipt of any HRA can claim HRA exemption to an extent of Rs.2000 pm. A flat rate.
Hi,
I am a self employed personnel, staying with my dad in a property which is not under his name but its part from the family settlement. Now can I pay rent to my dad, if yes then this income will be considered as his income?
OR There is any limit which I can pay and He may not have to take that amount as income? Please advise.
Thanks
contact for tax matters sudacgwb@yahoo.com (free by a volunteer)
Contact for Tax Calculations & Tax Saving
ashukla_nikhil@yahoo.com
09888530833
If HRA is received for part of a financial year and rent is also paid for the same period. (nine months for example). How would the 10% of salary be calculated?
How would the return be filed to claim a refund in this case?
Can Husband paying rent in two separate location for wife and him self .
Can he claim separately
Employee worked first 10 days in one company and hra received proportionately and 15 days another company(Company changed ) and hra recs proportionately. My question is can he claim hra in both the companies proportionately for that month.
Months Basic Pay AGP DA TA HRA DA-TA GROSS ATD* NET Salary
April 15600 6000 21600 3200 6480 3200 56080 2000 54080
May 10568 4064 14632 2168 4390 2167 37989 2000 35989
Ju+July 35729 13742 49471 4129 14841 4129 122041 4000 118041
Aug 15600 6000 25363 3283 6480 3282 60008 2000 58008
Sep 15600 6000 23112 3200 6480 3424 57816 2000 55816
Oct 15600 6000 23112 3200 6480 3224 57616 2000 55616
Nov 8840 3400 16121 2037 3672 2165 36235 2000 34235
Dec 0 0 0 0 0 0 0 0 0
Jan 12580 4839 18638 5341 5226 0 46624 0 46624
Feb 15600 6000 23112 3200 6480 3124 57516 0 57516
March 15600 6000 23112 3200 6480 3124 57516 0 57516
G.Total 161317 62045 238273 32958 67009 27839 589441 16000 573441
ATD*= Advance Tax Deducted by employer
HR Paying 8000 pm (8000*12)=96000
PPF Saving =100000
Calculate net tax payable in this year
IF 10% OF SALARY(BP+DA) IS GREATER THAN ACTUAL RENT PAID. IN THIS CONDITION HOW CAN I GET HRA EXEMPTION UNDER I.T.ACT ?
My employer is seeking original rent receipts for considering exemption under section 10(13A) for the purpose of deduction of tax at my salary. I have produced copies of rent receipts but he is not satisfied and has told me that exemption can not be considered else I produce original rent receipts. However, in my view, if I furnish original rent receipts to the employer and my case comes under scrutiny in future, how shall I be able to furnish the originals to the department. Please guide me.
I have a query in regards to the HRA claim for different cities. My company’s base location is Bangalore and I am working on a project which is based out of Korea. The project is such that we travel for 3 weeks in Korea and spend 1 week in India, during that course of period I generally go to Delhi either on vacation or at times I work from Delhi (from home) as well. The company doesn’t have any office in Delhi.
Can I claim HRA from Delhi considering the income would be shown under my landlord’s name as other income since I am not claiming it for Bangalore?
Mr.PPA: Yes.
i hate the subject
Hi,
As per my company policy for HRA exemption that, i need to submit rent agreement for exempting the tax and my rent is less than 1 lacs per annum.
So if it not mentioned in form 16 during filing TDS, Can I file HRA in Tax return.
thanks,
P P
Dear Suchanthi,Both are possible. When you are getting HRA and not paying any rent means you are staying in self-occupied property and HRA is taxable. Rebate u/s 24B is the negative income arising out of interest payment net of rent received if let out, and whole of it if no rental income.
Sir,
My question is can I avail both HRA and Interest if both houses are in the same locality (in the same apartment).
Do I need to show the house on which I am paying EMI as let out to avail the deduction of interest?.
MrAnup: If the rent paid in excess of 10% of salary is negative, whole of HRA received is taxable. The meaning of the rule is 10% of the salary one is supposed to pay as rent. In case you are not paying even 10% of salary as rent whole of HRA is taxable.
Sir,
H.R.exception limit illustration as given in your post as under
X has received following amount during the previous year.
Basic Salary – Rs. (5000*12) – Rs. 60,000/-
Dearness Allowance (D.A) – Rs. (1000*12) – Rs. 12000/-
House Rent Allowance (H.R.A.) – Rs. (2000*12) – Rs. 24000/-
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.
Here some basic data of Mr. Y received from employer. please calculate H.R. exemption limit of Mr.Y.
Basic salary:- Rs.20,180 x 12 month= Rs.2,42,160.
D.A.:-Rs. 11,503 x 12 month = Rs.1,38,036.
C.A.:- Rs.325 x 12 month = Rs.3,900.
The minimum of the following amount shall be exempt in case of Mr.Y.
Actual H.R. received by Mr.Y : Rs.2,000 x 12 month = Rs.24,000.
Rent Paid in excess of 10% of salary(Basic + D.A. + C.A.)=
[Rs. 24,000 –Rs.38,410] = (-) Rs.14,410.
40% of Salary – Rs.1,53,638.
Since figure of Rent Paid in excess of 10% of salary(Basic + D.A. + C.A.) is negative , what amount to be H.R. excepted of Mr.Y.
Mr.RBRai, You are eligible for double HRA or accommodation in lieu of HRA.? Civil servants are eligible for extra facility and same may be true for you. Whenever you occupy govt accommodation no HRA is paid.
Sir,
I am an officer in Assam Rifles under Ministry for Home Affairs. Pay and perks is at par with the other Central Police Organisations. This organisation has been fighting NE insurgency since from its inception. NE Region of the country is our home and hearth. We seldom get posted to other part of the country. I am presently posted in Dimapur, Nagaland since from last one year and a half. My wife stays at home because of there is no one to look after my house if she joins me. I have not been occupying my authorised government accommodation e.i. Type IV quarter in my present station instead I have been staying in a Single Officer Accommodation on a sharing basis with another fellow officer. Do I qualify to claim HRA? If, yes, then under which particular rule it is covered. Waiting for your enlightening. Regards!
I have a query :-
Sir I’m in state govt. teaching department. I’m posted in a interior hilly village. So my family(Housewife+children) lives in the city on rent for education of children. I have a room in village too. So can I get the HRA exemption for the rent paid by me in the city. Please also guide about the categories of cities other than 50% and 40% of salary for the exemption.
Mr.Bhuwan: If you are paying rent more than 10% of the salary, you can compute the exemption amount Else no exemption.
MY ANNUAL SALARY RS410000 INCLUDING DA.HRA RECEIVED ANNUAL RS 22080.ANY AMOUNT OF HRA EXEMPT?
my annual salary=[17000+da18000=35000*12=410000,Annual hra received 1840*12=22080 any hra exept?
Can pensioners avail hra exemption?
Mr.Ravikumar, Use the thumb rule. Whatever is used for granting HRA, use that component to compute exemption/rebate. When the HRA is granted based on percent of Basic, basic pay is the salary.
i am comes under the New Pension Scheme(NPS) for the calculation HRA exemptions what will be the salary includes? either take basic+DA+Grade pay or only basic? please clarify this
Thank you for your reply
Mr.Ashish Jay: As are an employee of Thane no need to change the filing of IT to Gwalior. Your income is from Thane. 2). If you are getting HRA and have the authority to work from home away from Thane, and if your employer is satisfied with the expenses towards rent at Gwalior he can allow exemption as per Section 10(13). If you are not getting HRA you cannot claim any exemption on rent.
I also wanted to know that before shifted to Gwalior i am paying income tax under Thane juridiction. as my office in Thane and now i am leaving in Gwalior which is my area of juridiction to pay tax.. and so My AO(Accessing Officer) is from which city (ward). Thane or Gwalior ?
Sir,
Till last year i am staying in rented flat in thane and company also in thane. They gave me HRA.
But since 1st April 2014, I am staying in Gwalior with parents and give rent to parents and my office still in Thane. I am work from home. Do i entitled to received HRA from employer? As i am not in the same city where office is … Is there any such rule that rented house and office must be in same city?
Mr.Rajesh Sheel: For claiming the rebate you must be staying in the rented house. Also you are already in rent free accommodation. You cannot claim rebate strictly. Assuming you dont have rent free accommodation and paying rent and staying in the house your claim will be rent minus 10%, i.e. rent received which works out to Rs.2500 – 1791.
reply
Sir, I am working in PSU and my Basic Pay w.e.f. 1/4/2014 till 31/03/2015 is Rs.17910/-. I am residing in non-family accommodation (rent free) of my company and company is recovering Rs.100/- as quarter recovery for this accommodation. Being residing in non-family accommodation (rent free) I am getting House Rent @10% = Rs. 1791/-Per Month from the company. But, regarding my child education my family is residing at Shimla on rent and I am paying Rs.2500/- Per Month to the Owner of House under proper agreement and rent payment receipts. I shall be highly thankful if your goodself will advise me that as I am residing in non-family accommodation (rent free) of the company and paying rent more than the HRA amount (HRA received Rs.1791/-Per Month & House Rent paid Rs. 2500/-Per Month), therefore can I save tax on the amount paid for rented accommodation if so how much of amount shall I save in tax. Regards
Mr.Puneeth: It is enough. HRA is not received and hence no income. Between taxable income of 2.5 lalk to 2.70 lakh no income tax is payable.
Dear Sir,
I am a contractual staff working in a govt. research organization in Delhi. My current salary is 2300+30% HRA, Office has alloted me a quarter so for that reason I am not eligible to recive HRA with my salary.
Wanted to know that whether income tax will be calculated on total amount of 23000+30%HRA*12 or only at total amount of 23000*12. also I have LIC & Health policy for which i have paid amount of 18000/-. Please suggest me is this enough saving to save my tax or I should have to have some more savings in order to save tax.
Mr.Prasad: Not the whole amount as you are getting HRA.
Sir, I am working in central government as Clerk. My Office has allotted me a BSNL Quarter after making agreement between my central government office and BSNL Office. I am getting HRA Rs.2500/- per month but I am paying Rs.3400/- per month to BSNL as per agreement. I have already calculate the exempted HRA in my case which comes to Rs.8500/-. My question is as follows:
Do I entitle to get deduction of whole amount i.e. Rs.3400/- under HRA, as this is a BSNL quarter (comes under government)?
Mob.7588180641
Sir, I am working in central government as Clerk. My Office has allotted me a BSNL Quarter after making agreement between my central government office and BSNL Office. I am getting HRA Rs.2500/- per month but I am paying Rs.3400/- per month to BSNL as per agreement. I have already calculate the exempted HRA in my case which comes to Rs.8500/-. My question is as follows:
Do I entitle to get deduction of whole amount i.e. Rs.3400/- under HRA, as this is a BSNL quarter (comes under government)?
MrLeo: NO.
I am staying in metro and paying rent, as well as I am paying rent for my dependent parents in other town…
Can I claim rent exemption in HRA rule for both rental premises.
Yes. You should certify the accommmodation is shared and claim restricted to 50% each, viz., Rs.1000/=
sir,
We both are employed and we are paying a monthly rent of Rs.2000/- . can we both claim 50% for hra exemption
Mrs.Tammy: For non salary people one can claim income tax rebate of not more than Rs.2000/- pm. Collect the rent receipt for Rs.800/= and get full tax exemption.!
Hi,My husband handles all maintenance for a property owner of 36 rentals The owner gives us free rent of a rental property he owns but at the end of the year owner always adds the 800.00 per month rent to my husbands earned income my husband is a contractor and this makes him go into a higher tax bracket when you take 800×12 = 9,600 rent that we actually didnt make? Should my husband be able to exclude this as earned income? Thanks for advice and direction for answers.
Mr.SamH: One have to have the rent receipt to claim exempt as per calculation. In your case, house on lease, you have to collect the fair market value from the municipal/local body of your place who will decide based on the location, house taken on lease.
Hi, my HRA is rs.6,600 per month. I have taking house for lease amount of rs.5 laksh with 11months agreement. can i claim for HRA? is this agreement document enough for my claim or need other document? can i claim full HRA or how much i can claim?
Thanks for your assistance.
Thanks
sam