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
If I am paying rent for multiple house properties occupied by me and my parents (dependents), then, can I claim exemption u/s 10(13A) regarding rent paid for multiple house properties.
I got only 6 month hra Rs.30797 in F.Y. 2018-19. My Basic is Rs.64100 and city is Z class. I have paid actual Rent Rs.36000.am I eligible for hra exemption? if yes then how much?
Sir I availed Govt qtr and also i got HRA for my family who leave far away from my place of posting.
Sir whether HRA what ever got towards my family will be deducted from gross salary after putting rent receipt on TDS
VERY NICE
My Taxable salary in 518920
Rent 84000/p.a living in pune for employement but in FORM16 employer not shown HRA how much can i claim HRA
what is the procedure for calculation of Income Tax by adding rent receieved from house let out along with salary/pension income
Sir,
Thanks for the valuable information. I understand the concept of Rent paid to parents is allowed but my question is that in which mode of payment is allowed under income tax mean rent paid by cash, cheque or bank transfer etc allowed for deduction
Sir,
I have taken loan from my employer at 0% interest (10 years) and I am paying the Tax on the differential amount of Interest rate with SBI as on last date of the FY. Please confirm can I take any benefit under Income Tax on the differential Interest amount calculated or tax part on the Interest Calculation which is being added in my Income and on which I have to pay Income Tax.
Beside this I am also claiming HRA as per rules.
Regards,
I joined government job in August 2018. Can I HRA of 1 lakh for these 7 months or Is it like 1 lakh for 12 months or for financial year with any number of months?
I am a state government employee and now our salary has hiked to equivalent central government employees with retrospective effect. If my arrears calculated and i got HRA arrears. The difference HRA paid and Arrears received. under this statutory deduction is compulsory or wave up available.
I wish to pay ret to my mother (she is non working) ,
the residence for which I need to pay rent is co -owned by “mother and father” ,
can I pay my rent to my mother only , as she is half owner of the property
Dear Sir,
The article is very nicely explained, but I have a question If I am already availing the benefit u/s 24 amounting 200000/-, Should I take advantage of 50% HRA paid by my company.
What about central government employees? Are the same rules applicable? Kindly, at the earliest, guide through with the exemptions available for central government employees.
SIR MY BASIC WAS RS 20000.00 AND DA OF RS 8650.00 AND HRA WAS 2000.00 AND I AM PAYING THE RENT RS 4500.00 P/M
NOW I DO NOT WANT CLAIM SEC 10(13) BUT I WANT TO CLAIM UNDER SECTION 80GG
10% of Basic salary + DA was higher than HRA paid. Government salary. HRA Exemption eligible or not?
Rent received. : 20,100
Rent paid. : 45,000
10% of Basic + DA : 53,000
we are manufacturing Tool and dies for OEM(s) but as a contract the cost of tooling is to be capitalised at our own. only components will be sold. Now the tooling is our assests till business carried, after closure of transaction being our property we have liberty to dispose off.Now before capitalization how can be Generate GST invoice and pay GST. Please suggest method of capitalization and invoicing system.
regards
R K Mishra
my employer says that contribution of NPS by the employer is to be added in the salary. after adding in the salary deduction u/s 80c will be admisable on both the parts (employer and employee) Is it wright or wrong ?
Read carefully the article in respect of HRA calculation and update/ claim for HRA exemption ,
writer has given clarified in details .
I have read a few of your articles on income tax exemption s for individuals. You have written each item in detail and have linked earlier articles with each other. Great work. Keep it up.
Sir,
How to calculate HRA ..Our Pm Salary is Rs. 5Lacks (Basic + DA) + his Hra is 199000 and he is paying rent for his house is Rs.1.20 lacs for 12 months.
Kindly how much hra is allowed to my PM
I m living in rented house and i have salary income but my compeny can not give me HRA and it does not saws in form 16 so can i claim my rented house exp.
Instead of staying in house, I propose to put up in a service apartment/hotel. Is the amount paid to the service apartment/hotel claimable as exemption?
i have stayed in house on rent only for 4 months in the year 2016-17 and hence paid rent of 4 months. so to get the tax benefit on rent paid, calculation to be done considering whole year or only the duration mentioned above? please reply
Sir
While calculating the Rent Paid in excess of 10% of salary, I am getting a negative value.
My basic pay in a month is 177100. I am paying 15000 as rent per month.
What is the methodology to adopt for calculating the amount exempted under HRA. Please advice.
Sir,I am a state government employee.Ihave taken Housing Loan on 2012.I am working out of station to my own house.I am residing in rented house of Rs.6000/-pm.My own house was not given rent purpose.
Hence,i have eligible for exemption house rent and housing loan interest ? Please clarify.
My basic pay is Rs.26360/-pm Da Rs.34795/- pm iam paying a rent of Rs.42369/- per annum for the govt quarters occupied and receiving Rs.3200/- pm towards House rent allowance How much i get hra rebate
Reply
– See more at: https://taxguru.in/income-tax/house-rent-allowance-hra-taxability-and-workingcalculation-of-taxable-hra.html#sthash.sFm8BH6T.dpuf
iam paying a rent of Rs.42369/- per annum for the govt quarters occupied and receiving Rs.3200/- pm towards rent How much i get hra rebate
iam occupying govt quarters and iam paying Rs.42369/- towards rent and iam receiving Rs.3200/- as rent per month. How hra rebate can be claimed
Sir,
I am living in a rented house.As of now I need no HRA exemption as my income do not cross the taxable limit after considering 80 C and 80 D exemptions.Please tell me whether I need to submit
rent receipt now to avail HRA exemption in future in case of revision in salary.
Hi sir…I need one information…I am working in an institution for 11 and half months…I am paying 8000/month…can I claim for 11and half months or complete 11 months
I am in occupant of a govt quarter and for maintainence of my family I kept them in a rented house at other state for which I am paying rent.
I do not receive any house rent. Can I claim HRA.
I am govt. employee living in govt. quarters so not getting HRA
1. Parents are living in rented house
2. Spouse living in rented house
3. Having own house
at different places
can i get exemption under 80GG
or any other source ?
Hi, I have a quarry. After 7th pay commission, my monthly basic salary is 47000 approx..DA is 0, HRa is 1820. I am paying Rs. 5500/-per month house rent.. I am living in z class city. What would be my HRA exemption under the Income Tax Rules.. Please
ENNGA STREETLA ORUTHAN IRRUGA AVAN NAME KADAR. AVANNUKKU ORU HOUSE 1.25 LAKHS VARRUMANUM VARRUTHU SIR . AVANNUKU INCOME TAX ILLLAYA. STREET NAME . MELA CHINTHAMANI
Is there a rule that if my rent claim is more than 15000 per month my landlord also should file ITR compulsorily ?
My parents stay in rented house, and my sister pays the rent for this house. However, my sister stays few days with parents and few days of week is staying with her husband in their own flat in same city. Can my sister claim HRA tax benefits?
I have stayed in Govt quarter till june 2015,and feb
2016 onwards i am staying outside by rented house.So whether i can get tax exemption for three month for last financial year til march 2016? and how i can claim for that? becoz there is no option in online eflling tax return? pls tell me?
I have stayed in Govt quarter till dec 2015,and january 2016 onwards i am staying outside by rented house.So whether i can get tax exemption for three month for last financial year til march 2016? and how i can claim for that? becoz there is no option in online eflling tax return? pls tell me?
(HRA) I have job in Himacha Pradesh and paying rent 96000 per year. My family staying at Gujrata and i am paying 120000 rent per year. Can i claim both rent as HRA?
What wiil be the basic pay for a Pilot ?
Will it include only basic pay
Or will it include other allowances?
My friend is a central govt. employee but his wife is state govt. employee, then what would be the house rent rule for their?
I don’t think relocation is covered in the non taxable category Like LTA and medical. Since the company paid you extra money they would tax you accordingly.
HRA Issue: There must be quite a lot of people who would come under the category that I am going to discuss. ie. those who stay in their own house and do not pay rent but receive the HRA from the company where he / she works. In this case they are not eligible for any deduction – right?
Now my question is what about the society charges they pay. what about the municipal corporation tax. Why these should not be treated under or as rent or some sort of rebate should be provided. do you agree?
is there an upper cap (maximum tax free HRA one can avail?)
Hi
I do not own house but live with ma parents..we have taken loan for home on the name of mother. I do contribute in home loan repayment . Can I get any deduction under income tax act.
Please suggest any other alternatives if available.
Thanka
Kamlesh
my Room Rent is 1800/Month. now the Account Dept. asking for Pan card Copy of land load. and land load Don’t this. Does pan card Copy is Mandatory? Kindly Suggest.
I too has the same doubt..
can any one please help me out..
is the Rent paid by the assesse for staying of his dependent can be included for HRA exemption
hello,
Please help us on How to Save the capital gain Tax
I purchase flat on 24-03-2003 purchase cost of flat is Rs. 6.37.150
I sold that flat in feb 2016 sale cost is 45,00,000
Indexation cost in 2002-03 447 and in 14-15 1081
637150*1081/447 = 1540848
So Long term capital gain is Rs. 29,59.152
what should be done to save capital gain tax of Rs. 29,59,152
Hi,
Please see the below details and help me out.
Home loan taken on August 2015, In December-2015 I got the possesion of my new house.
Earlier I was living on rent, now moved to my new house in Jan 2016
Can I claim tax benefit on: 1. HRA for period April-2015 to November-2015 (8 Months) 2. Sum of Principal Amount from the EMI which I will pay from December-2015 to March-2016 (4 Months)
3. Sum of Interest Amount from the EMI which I will pay from April-2015 to March-2016 (12 months),