HOUSE RENT ALLOWANCE
What is HRA?
House Rent Allowance or HRA section 10 (13A) is a part of the salary provided by an employer to his employee for his rented accommodation.
Who can claim HRA?
Salaried individuals, who live in rented houses, can claim the House Rent Allowance (HRA) to lower their taxes – partially or wholly. The allowance is for expenses related to rented accommodation. If you don’t live in rented accommodation, this allowance is fully taxable, you can't avail this benefit if you are self-employed or you live in either your own house (a house which is in your or your spouse’s name) or in an employer-provided accommodation
How Is HRA Calculated
To figure out how much HRA exemption you are eligible for, consider these three values:
- Actual HRA Recevied
- Rent paid - 10 % of slary ( basic salary + DA )
- 50% of your basic salary (basic salary + DA) in metro cities & 40 % of non metro cities
Least of the following is exempted.
Ram received following from karsamadhan delhi based employer.
Basic salary - 2,80,000 p.a
DA - 1,20,000 p.a
HRA - 96,000 p.a
And pay Rs. 108000 rent for whole year.
Calculate the HRA taxable ?
- Actual HRA recived 96,000.00
- Rent paid – 10% of salary
108000- [10% of ( 280000+ 120000)]
108000- 10% of 400000
108000-40000= 68000 68,000.00
- 50% of salary (120000+ 280000)= 200000 2,00,000.00
HRA Exempt: Rs. 68,000.00 (lower of above)
HRA Received - HRA Exempt = HRA Taxable
96,000 - 68,000 = 28000