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
Date of admissibility of HRA in case of late application
Is it necessary to submit copy of PAN card of the owner or PAN number is enough?
do we need to submit(mandatory) the copy i.e xerox of PAN of my owner or PAN card number is enough.
of course , you will get HRA exemption but surely less than what is shown on your salary slip. The calculation is above.
I am a fixed salaried person. In my salary sleep only final figure of salary is mentioned. How can I claim House Rent. I am leaving in rented house.. Kindly guide me.
By your logic.. what ever money that you spend, should be non-taxable.. That is not true. Relocation is taxable if it is getting reimbursed.
My Annual HRA is 100,000 so I am entitled monthly HRA of 8333.33
I am staying in PG accommodation where I am paying 6000/month which is less than the HRA what I get from my company.So if I show 6000/month rent will I get tax exemption?
Can I claim HRA TAX benefits along with Home Loan ? As I am staying in different city on rent alone i.e. Delhi and my family is staying in my Home in a different city i.e. Gurgaon, which is registered to my wife name. My wife is house wife and she is primary applicant of Loan and I am co-applicant. Please advise.
Hi ,I am working in Lucknow but my family is staying in a rented accommodation in Delhi .Can I claim HRA as I am also staying on rent in Lucknow
Is PAN card detail necessary for HRA deduction
s PAN details of landlord compulsory for claiming HRA ?
I was in Noida and joined new company in PUNE. During relocation expense I spent 70000/- almost from my pocket including Household shifting, Travelling with family from Noida to PUNE by flight & Car shifting.
Company promised me to reimburse the amount and after I joined I submitted the actual bills and statement. With in 2 months, I got full payment.
now company is putting the reimbursement paid amount as my INCOME.
I believe it should not be TAXABLE, because I paid from my pocket which is already tax deducted source and now when I got my money back then again it cannot and should not be taxable.
For justification, I gave the clause of 10 (14) 2BB & 17 (3) of Income Tax 1961-62.
I have stayed on rented house for 2 or 3 months before shifting to my house. So can I claim for those 2, 3 months and Home loan interest both. I have got the possession in march 15
Can I apply for tax benifit home loan availed from two different bank for same home. One is home loan and another is home repairing loan.
my House rent is 120000 and i paid Rs 140000. my House rent Amount 120000 is exempt for income tax.
hi ,
I have the pan card of my landlord , but i dont have the photocopy of the same , is that suffice to submit the documetn with the photocopy of the landlord .
If pay rise is given with retrospective effect there by amounting to arrears HRA payout for the period which has already lapse, i.e. for instance payrise given effective Jul’15 in Oct’15 (3 months arrears)should arrears HRA be reconsidered for calculating monthly HRA for the periods Jul’15 to Sep’15 which was already calculated earlier.
Our Kids stay in our own house. I stay with my wife in rented house. kids stay separately as it is small house for study. Can I avail HRA exemption/deduction ?
please reply
Can I avail HRA Exemption/Deduction for me as I stay with my wife in rented house. Our Kids stay in my own house. we stay separately due to Kids study as it is very small House.
i did not see anything named as dearnes allowance in my CTC. in that case how do we arrive at an amount as salary by looking at the CTC
HI ,
I dont have own house,I am staying with my father ( as house is on his name ) & paying rent of 12000 to them ,there by showing the same as income in father’s IT return ( income from other source ) .
I have two questions as below
1 ) Now I have also taken mediclaim policy & paid premium of 9000 INR for my parents to whom i am paying house rent .Now can i take deduction of 9000 TINR the same in sec 80 ( parents are non-senior citizen ) ? Please advice .
2 ) We all have also travel then can i put parents tickets to claim LTA exemption ?? please advise separately.
Thank you ,
Can I claim HRA for my parents living in a rented flat, & I am living in employer’s colony
Have taken an employment with a U.S company. It is currently not registered in
India.
However I work from India and my employer pays my lump sum salary in Indian currency into my Indian account.
Given that my income is in the tax bracket, wanted to know on the tax implications and how can I get tax benefit ,HRA,MADIClAM
Hi Sir, I’ve received a salary breakup details from an organisation mentioned that HRA is 3 times of basic salary. By seeing this structure itself I got a doubt that is it possible that HRA is more than basic. And in this case HRA is three times of basic.
Can you please clarify the doubt that “Is HRA more than basic is allowed?”
Hi, If I ve joined a company from mid of a financial year(say for 6 months only), then in the above calculation should we considered the actual basic salary received(i.e for 6 months) or should we consider the annual basic salary(12 months)?
Regards
Gayana
Dear sir,
I am residing in a Government allotted quarters. I will get HRA in my salary but my entire HRA will be deducted again under deductions and it will go back to Government. Since HRA is completely deducted from my salary, am I eligible to claim exemption for complete HRA? If yes, please mention the reference section under which I can claim exemption
Thank you
Please provide HRA exempted amount?
if i have own house can i take HRA from company..?
Hello,
1. I am residing in a rented flat with rent of Rs. 12000 p.m. with my parents. My current basic is 23000 p.m. and hra is 11500 p.m.
2. I have booked a house with home loan. EMI shall be 25000 pm with 18000 p.m. being interest. Possession shall come in december’15. My mother is a co-owner in the property and my father is working with a private company.
3. I have changed a job and shall change the city as well from Octoberr’15. I will be residing in a rented flat with house rent of Rs. 12000 p.m. and my salary will be basic 37565 and hra – rs. 18783 per month. The owned flat in current city shall be occupied by my parents.
Can you help me with the tax planning for maximum HRA and housing loan benefit
Sir If my Basic Salary is 12000 and HRA 4000 and I am paying actual rent of rs 8000 per month what would be the deduction i can get from income tax. Please reply so that i can file my income tax return accordingly
Basic Salary :- 16,666.00
HRA:- 20,833.00
1.How much(max) amount i can declare for hose rent.i am staying in NCR noida.
can i get the tax benefit on 13k per month rent(156000/-)
2. After declaring of 1lac 50k in 80c still 1,397.00 is getting deducted as income tax. what i need to do so it not get deducted.
Hi,
I bought a commercial property whose value was above Rs.50 lac & I paid 1% TDS on behalf of the seller on my share, which is reflecting in Form 26 AS.
Now I am filling online return, please could you guide me where do I need to mention this TDS paid amount while filling online return.
Thanks in advance.
IF WANT ANY TYPE INCOME TAX RETURN, REFUND, LAST YEAR REFUND SO CALL URGENTLY FOR SAVE YOUR MONEY
CALL-8273980693,9412541791
email me at sknagothu@gmail.com for tax filing and planning.
For Tax information, calculation, and also for tax planning & filing returns. please post your queries and requests by emailing me at sknagothu@gmail.com
hi,
the author keeps ignoring multiple queries regarding HRA claim for people paying rent for 2 houses at the same time – one being self occupied, and another being occupied by parents (in the same town, or in other town).
There is no clarity on this subject in any forums.
Request the author, or anyone who knows to reply conclusively.
Many Thanks!
MY TOTAL INCOME FROM SALARY is997127 which after 80cc deductionis868359. Ipaid 36000 as house rent How much HRA EXEMPTION Ican get?
i am staying in house coowned by my parents. can I claim HRA by paying rent to them?
Hi
Can you please let me know whether a salaried person can claim benefit of HRA exemption at the time of filling his/her return.
Issue is that a Mr.X has left a organisation while leaving he had submitted his HRA proof to HR department. HR doesn’t consider that proof but deducted & paid the tax on the whole salaried income & issue the form 16 & 26AS.
Now Mr.X can claim HRA exemption while filling his return.
Can a Person pay rent to his children? Which ruling disallow paying rent to Spouse?
Sir,
I have built home taking company loan, at Bardoli 35 Kms. from Surat. I am living in Surat where my office is situated. Up till I lived in Company Leased Agreement. Now I discontinue the company lease agreement & paying rent of Rs. 6500/- Now I would get Approx. Rs. 5000/- (30% of Salary) WHAT IS TA IMPLICATIONS?
SB Mahajan
sir i am from jhansi . now jhansi comes in Y class cities .but my factory BHEL SITUATED 20 KM AWAY FROM JHANSI CITIY .CAN BE GET 20% HRA OR NOT
What is T&R facility which cost is deducted from my gross salary
Hi,
I am paying rent for two houses, one for myself and one for my parents. I was wondering if I could claim HRA tax rebate for both the houses? Any suggestions from you would be very valuable.
Many thanks…
Hi, I’m Pallavi and I have a question. Could you please tell me if i can claim exemption on HRA? The situation is I stay with my parents in a rented house and my father pays the rent. Can I still claim exemption on HRA??
IF so then what does my father have to do while filing his tax returns?
I’m Quite new to all this.
Dear Sir,
This is very helpful article. I have some doubts. I received the arrears in the same financial year. Its incremental DA. Will it be included for calculating the HRA deduction?
I received once in April and 2nd time in October.
Thanks.
Mr.R.K.Agarwal: Yes; you can claim the HRA exemption in respect of the House Rent you are paying. Regarding the own house you are not using you can claim the exemption if you are having rental income from that property. No exemption you can get if the property is un-used and idle.
Murtuza: No
Hi,
My family resides in Bangalore and I am paying rent over there. I have recently got a new job and have moved to Mumbai where I am staying with my parents but my wife and kids continue to stay in the rented apartment in Bangalore.
Can I claim HRA exemption for that rented apartment in Bangalore or not??
Sir,
I am paying rent for hired accomodation in non-metro city. Also I am getting possession of a purchased home in the same town but not intending to reside in the same being in remote locality.
Can I claim HRA exemption alongwith interest & principle exemption under section 80C and section 24.
Pl reply either on above e-mail ID.
Thanks and Regards