How to calculate the Income Tax exemption on House Rent Allowance...

House Rent Allowance on Income Tax

How to calculate the Income Tax exemption on House Rent Allowance...

If an employee is living in a rented house, exemption is allowed to the extent of the least of the following...
Actual House Rent Allowance received from your employer
Actual House Rent paid excess of 10% of salary
50% of basic salary, if residence is in a metro or 40% of salary in non-metros.

For example :
If an employee is getting pay of Rs.15,000 pm, and HRA is 4,500. He is paying rent as Rs.2,500
calculation of amount of House Rent Allowance admissible for imcome tax exemption will be...

1. HRA received (12 x 4,500 = 54,000) : 54,000

2. Rent paid in excess of 10% (30,000 - 18,000) : 12,000

3. 50% of salary : 90,000

Out of the total of House Rent Allowance of Rs.54,000 received, Rs.12,000 which is the lease of the three items is admissible for income tax exemption. So the balance of Rs.42,000 will be include under income.

Source: cgnews

Related Post: How much of your HRA is Income tax exemption..?

Comments

Unknown said…
Is salary Includes the BASIC and DA
In the Illustration Concept of DA is not Included at ALL. Hope the Writer may Explain this.
Anonymous said…
Is the 50% of Salary Includes DA component or Not. Clarification needed
Anonymous said…
For the purpose of HRA salary includes Pay+Grade Pay + D.A.
Anonymous said…
whether receipt for payment of HRA is need for claiming deduction
Neha said…
we are not receiving HRA from the employer. But we are paying house rent. whether we can avail tax benefit.please clarrify
D/Neha, you can get the benefits u/s 80GG where the max limit Rs. 24000/-PA
For the HRA Calculation U/s 10(13A) D.A. will be include. You can try this HRA Calculator and which can found www.itaxsoftware.blogspot.in
Anonymous said…
I AM GETTING ONLY Rs 320 PER MONTH AS HRA.(UNCLASSIFIED AREA)IN TAMILNADU GOVERNMENT. PAYING RENT Rs 2000 PER MONTH. MY TOTAL SALARY (PAY + DA)30000 PER MONTH. PLEASE KINDLY INFORM ME ABOUT HRA EXEMPTION TO ME.

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