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HRA Exemption Calculation (Annual)
How HRA Exemption is Calculated
The amount of House Rent Allowance (HRA) exempt from tax under Section 10(13A) is the minimum of the following three amounts:
Amount 1: Actual HRA Received
The total HRA received from your employer for the relevant period.
Amount 2: Rent Paid - 10% of Salary
The actual rent paid by you for accommodation, minus 10% of your 'Salary' for the relevant period.
Amount 3: 50% of Salary (Metro) or 40% (Non-Metro)
50% of your 'Salary' if you reside in a Metro city, OR 40% of your 'Salary' if you reside in a Non-Metro city.
The lowest of these three calculated values is the amount exempt from tax. Any HRA received above this exempt amount is considered taxable income.
What is 'Salary' for HRA Calculation?
For the purpose of calculating HRA exemption, 'Salary' includes:
- Your Basic Salary
- Dearness Allowance (DA), only if it forms part of salary for retirement benefits
- Commissions based on a fixed percentage of turnover (if applicable)
Other allowances or perquisites are generally not included in 'Salary' for HRA calculation.
Frequently Asked Questions
HRA stands for House Rent Allowance. It is a component of salary paid by employers to employees to meet the cost of renting accommodation. A portion of this allowance can be claimed as tax-exempt under certain conditions.
Salaried individuals who receive HRA as part of their salary and pay rent for their accommodation can claim this exemption. You cannot claim HRA exemption if you live in your own house or if you don't pay any rent.
You generally cannot claim HRA exemption if you live in your own house. However, if you own a house in one city but live in rented accommodation in another city (e.g., due to work), you can claim HRA exemption for the rent paid.
You usually need rent receipts as proof of rent payment and a rental agreement. If the annual rent paid exceeds ₹1,00,000, you must provide the PAN (Permanent Account Number) of your landlord to your employer.
Yes, you can claim HRA exemption while living with your parents, provided you pay them actual rent and have proof of payment (like bank transfers). Your parents would need to declare this rent as income in their own tax returns.
If HRA is not part of your salary structure, you cannot claim exemption under Section 10(13A). However, you might be eligible for a deduction under Section 80GG, subject to certain conditions.
HRA exemption should be calculated separately for the periods you worked under different employers. The salary, HRA received, and rent paid during each employment period should be considered independently.
Disclaimer
This HRA Exemption Calculator provides estimates based on the data entered and standard interpretation of Indian Income Tax rules (Section 10(13A)). Calculations are for illustrative purposes only and do not constitute tax advice. Tax laws are subject to change and interpretation. Always consult with a qualified tax professional or chartered accountant for accurate tax planning and advice based on your specific circumstances.