The calculation is done by taking the salary as Basic Pay + D.A. (if considered for retirement benefits)
HRA or House Rent Allowance, is an allowance that salaried individuals receive from their employer for meeting the rental expenses of their house. The amount received is partly exempted from tax for the employees who are residing in a rented house. In case the employee lives in his/her own house and does not pay any rent, the entire amount would be taxable
| HRA received | xxx |
|---|---|
Less: Exempted HRA (minimum of following three amounts)
|
(xxx) |
| Taxable HRA (to form part of salary for tax purpose) | xxx |
*For above calculations, the salary would be taken as Basic Pay + D.A. (if considered for retirement benefits) + Commission. You can use our free HRA Calculator to calculate your exemption amount.
Here are the steps to use the HRA Calculator -
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Quick: HRA calculators are very fast and effective. You don’t have to spend long time doing manual calculations. You can calculate HRA using HRA calculator in a matter of minutes. All you have to do is enter a few basic details about the HRA received and rent paid, and you can calculate your exemption.
Easy to Use: HRA calculators are extremely easy to use and understand. Even laymen with zero knowledge of taxes can easily compute their HRA exemption using an HRA calculator.
Accurate: HRA calculators do not make mistakes and are accurate. It considers all the rules and regulations to give you the most accurate results.
It depends on the amount of rent paid:
To claim House Rent Allowance (HRA) exemption in India, you need to meet the following eligibility criteria:
The amount of HRA that can be availed as an exemption from the taxable salary is calculated using the following HRA calculation formula.
The least among the following can be claimed as an exemption or deduction:
The least among the above is considered exempt from the taxable salary.
Here,
Basic salary = Basic salary + DA (Dearness allowance)
Let's assume you receive a monthly HRA of Rs. 20,000, and you live in a metro city. Your basic salary is Rs. 40,000 per month, and you pay a monthly rent of Rs. 15,000 for your accommodation.
To calculate your HRA exemption, you need to consider three scenarios and select the one with the least amount:
In this case, the least of these three scenarios is Rs. 11,000 (Rent Paid minus 10% of Salary). Therefore, your HRA exemption is Rs. 11,000 per month.
Your taxable HRA is the actual HRA received minus the exemption: Rs. 20,000 - Rs. 11,000 = Rs. 9,000 per month. This is the amount that will be added to your taxable income for the purpose of income tax calculation.
Yes, you can claim HRA tax exemption by paying rent to your parents. It is advisable to have a rent agreement. You would need rent receipts to claim HRA exemption. Also, your parents need to show rental income from you in their income tax return.
Tax benefits of HRA cannot be claimed by paying rent to your spouse. So, if you are staying in a house owned by your spouse, then HRA exemptions are not available to you. However, if you still wish to claim exemption, you should be ready for litigation as the Income Tax Officer might allow it as per the decision in one of the cases in the Ahmedabad Tribunal.
No, you cannot enjoy the tax benefits of HRA if you live in your own house. One can not pay rent to himself. Hence, no exemption is available for HRA, and the whole of HRA received becomes taxable under Income from Salary.
If the annual rent paid exceeds Rs.1,00,000/- it is mandatory to report the PAN of the landlord to claim HRA exemption. In case the landlord does not have a PAN, a declaration of landlord is required.
If the annual rent exceeds Rs. 1,00,000 and the landlord refuses to give his PAN, then you cannot claim HRA for the rent paid in excess of Rs. 1,00,000/- and your employer will deduct the TDS accordingly. Therefore, discussing this with your landlord before taking the house for rent is advisable. However, you can claim the benefit of rent paid at the time of filing of your return if the payment of rent can be substantiated to the income tax officers if required. Need a CA opinion? Contact Now!
For claiming HRA, there is no requirement that you should not own a house. If you reside in a rented property, then you can claim an exemption even if you own a house (in the same city or in a different city).
Yes, certainly. You can claim both. If you are staying in a rented house, you can claim an HRA tax exemption. Simultaneously, if you have taken a house loan, then you can claim the house loan benefits, too. If you have bought a house with the help of a home loan and live in another house on rent, you can claim tax benefits for both. But if the house you bought and the house you live in are in the same city, you should have a genuine reason for not living in the house that you own to prove to the Income Tax Officer. The reasons could be that the house you own is too far from your workplace, or the commute is very difficult. Still Confused? Need CA opinion. Connect Now!
Yes, why not, provided both are paying rent? Also, it will be better if the landlord issues two separate rent receipts or specifies the proportion of rent borne by each person on the rent receipt.
Many times, it’s observed that companies do not give HRA exemption in Form 16 due to the unavailability of complete details. If your HRA claim has not been considered in Form 16, then you can directly claim the exemption in your IT return. Our experts are here to help you claim all the available tax exemptions and deductions & file your IT return in a hassle-free manner. Connect Now to know how!
A self-employed person doesn't receive any salary, so there is no HRA, and consequently, the question of HRA exemption doesn't arise.
However, to take care of such a situation, there is a separate provision in the Income Tax Act whereby a person not in receipt of HRA but incurring rent expenses for his residence can claim a deduction under section 80GG.
If you are paying rent but are not receiving HRA, you can claim a deduction under section 80GG. The least of the following amounts is available as a deduction:
However, following points must be kept in mind:
In a nutshell, this benefit is available only to those who do not have a house and live in rented houses.
Maintenance charges are not considered as property owner’s earnings. Therefore, there is no exemption available for such expenses. The same goes for electricity expenses.
If you are living in a rented property, you can claim deductions on your rent under section 80GG instead of section 10(13A). You also have to meet certain conditions to be able to avail of this deduction.