House Rent Allowance is normally called HRA by the assesee. The HRA means House Rent Allowance received by you from employer in respect of residential accommodation occupied by you. So in simple words the employer will pay you the rent which you are paying for your rented accommodation.
Most of the assesees confuse over the liability of tax payable for House Rent Allwance (HRA). As per the provision of Rule 2A, the whole HRA will not be taxable but the par of it. Section 10 (13A) deals with the provision of House Rent Allowance.
The following calculation is based on the Assessment Year 2015-16 & 2014-15.
Conditions to Claim HRA Exemption
- You should have stay in rented accommodation.
- You should pay rent to the owner regularly.
- The accommodation or premises are not owned by you or any of your family member.
- You should produce all the rent receipts in proof of actual payment.
- If you are getting HRA up to Rs.3000 p.m. then you are not required to produce the rent receipt.
Calculation of HRA
You are entitle to get exemption of the least of the following:
1) Actual house rent allowance received, or
2) Rent paid in excess of 1/10 of salary, or
3) An amount equal to –
2) Rent paid in excess of 1/10 of salary, or
3) An amount equal to –
- Where such accommodation is situated at Bombay, Calcutta, Delhi or Madras; one-half of the amount of salary due to you in respect of the relevant period, and
- Where such accommodation is situated at any other place; 2/5 of the amount of salary due to you in respect of relevant period.
4) The calculation of HRA will be computed on annual basis when all the factors were same like accommodation location is same for whole year, rent paid is same for whole year. Otherwise the calculation should be done on monthly basis.]
Important for Calculation of HRA: The salary includes dearness allowance but exclude all other allowances and perquisites.
Examples to Clear the Concept of HRA Exemption Calculation
Mr. Tarun has rent paid accommodation in Delhi. The following numbers will help Tarun to calculate the exemption of HRA.
Pariculars
|
Amount (P.A.)
|
|---|---|
| Basic Salary | 500000 |
| HRA | 90000 |
| Rent Paid | 80000 |
| Now find the least of the following for exemption | |
| Actual HRA | 90000 |
| Rent Paid - 10 % of Salary i.e [Rs.80,000 - Rs.50,000] | 30000 |
| 50% of Salry (As in Delhi) | 250000 |
| So, HRA exemption is Rs.30,000 and taxable amount is Rs. 90,000 - Rs.30,000 = Rs.60,000 | |
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