WHAT IS HRA ?

 

The exemption on HRA calculation is done according to 2A of Income Tax Rules. According to Rule 2A, the minimum of coming up next is excluded from salary under Section 10(13A) and doesn't form part of the taxable pay. 

  • Exact HRA got from employer 

  • For those living in metro urban communities: half of (Basic salary + Dearness allowance) 

  • For those living in non-metro urban communities: 40% of (Basic salary + Dearness allowance) 

  • Genuine rent paid short 10% of (Basic salary + Dearness allowance) 

HOW IS HRA TAXED? 

On the off chance that the installment of rental costs is more than ₹ 1,00,000/ - every year, at that point it is obligatory for the employee to give the PAN number of the landowner while documenting personal tax returns. 

Allow us to comprehend the HRA part that would be excluded from personal tax through a model 

Mr X, living in Mumbai, has taken up a convenience on rent for which he pays a month to month rent of ₹25,000. He gets a Basic Salary of ₹45,000 month to month alongside DA of ₹7,000 month to month which forms a piece of the salary. He also gets an HRA of ₹ 1 lakh from his employer during the year.

 

HRA Particular

AMOUNT

HRA received

₹ 1,00,000

50% of [(45,000+7,000)*12]

₹ 3,12,000

Actual rent ₹ 3,00,000 - 10% of [(45,000+7,000)*12]

₹ 2,37,600

HRA deduction = Least of above

₹1,00,000

 

Thus, ₹ 1,00,000 would be excluded from salary u/s 10(13A). 

 

Likewise, if the employee is paying rental costs yet doesn't get HRA allowance as a piece of salary from the employer or if the individual is paying rental costs yet doesn't have salary pay, the advantage of paying rental cost can in any case be guaranteed under Section 80GG of the Act.  

FAQs

 

Would I be able to get a tax discount on the off chance that I am remaining in my own house? 

No, you can't guarantee a HRA Exemption for this situation. 

 

I have a house in Delhi; yet am remaining on rent in Bhopal? 

Indeed, you can guarantee HRA. 

 

My house is under development and I have taken another convenience on rent in a similar city? 

Indeed, you can guarantee HRA. 

 

Would I be able to get both HRA tax exemption and tax refund on my home advance? 

Indeed, you can; where you have rented a house (for yourself) despite the fact that you have your own home, for which you are paying a home credit through EMIs. For this situation you need to demonstrate that your house (for which you are paying home credit) is far away from your working environment.

House Rent Allowance (HRA) is an amount given by an employer to their employee as compensation for house rental costs paid by the employee. It forms a piece of the salary paid by the employer to their employee. 



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