HRA Exemption Calculator

What is HRA?

HRA means House Rent Allowance is an amount which is paid to employees by their employers as a part of their salaries. The purpose of this rent allowance is to meet the cost of living in a rented accommodation. The HRA is regulated by the provisions of Section 10(13A) of the IT Act. HRA is a biggest advantage is for a person to claim an annual deduction of Tax. The decision of HRA is based on the different criteria such as the salary of the employer and the city of residence.

How is HRA calculated?

HRA Calculation depends on the several factors like if they are living in a METRO city then 50 % of their basic salary or if they are living in a NON-METRO city then 40 % of their basic salary.

Can you avail HRA tax benefit if you are living with your parents?

In case if you stay with your parents, you are eligible to pay rent to your parents and collect a receipt for HRA claim but you cannot be either owner or co-owner of the particular property in which you are living and claiming HRA.

Is HRA tax-free?

The HRA can be fully or patially free from tax. Those employees who get salary from the employes can claim HRA benefits that depend on the city in which you are living is either METRO city or NON-METRO city.

Who can claim HRA?

The person who is salaried and also living in a rented house can claim HRA tax exemptions.

What are the biggest benefits of HRA?

HRA provides important information about the human capital to the organisation enabling executives to take right decisions in respects of recruitment, promotions, transfers etc.

Which are the HRA exemption income tax rules?

The 3 rules of HRA tax exemption are as below:

  • Actual HRA received during the financial year.
  • The house rent allowance cannot exceed more than 50 % of the basic salary if you are living in METRO city or 40 % of basic salary if you are living in NON-METRO city.
  • Thw Rent paid in excess of 10% of BASIC salary. i.e. Excess Of Rent = Rent Paid – 10% of Basic.

Note: If you don't receive HRA, you can now claim upto Rs. 60,000 deduction under Section 80GG.

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