HRA CALCULATOR (EXEMPTION -HOW TO CALCULATE)

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In most of the cases ,House Rent Allowance(HRA) is part of salary package .so exemption of Hra how to calculated is most of us is want to know in fact most of person already know about HRA exemption,I am giving this to shares my understanding on the above issue which may be useful for many of this site visitors.if you have any different views or any point left in this post ,please record in the comment section.

calculation of HRA exemption.

  • least of following three will be exempted
    1. Hra received
    2. 50% of salary in case of residential accommodation taken on rent is situated in Bombay ,Calcutta ,Delhi, or Madras (Chennai) and 40 % of salary in in any other case.
    3. rent paid in excess of 10 % of salary
other points to be noted
  1. Salary for this purpose mean
    1. Basic salary
    2. Dearness Allowance if terms of employment so provides.
    3. commission based on a fixed percentage of turnover.
    4. all other allowances and perquisites is to be excluded.
  2. Salary related to period of rent should only be considered on due basic .
  3. Salary received in period as advance or arrears not related to calculation period should not be included.
  4. For calculating 40/50 % as per point 2 above place of residential accommodation is important ,not where the person is working.suppose Rajiv taken a house in Delhi on rent but has working in Rohtak than he is eligible as per point 2 upto 50 % as house is situated in Delhi.
  5. The calculation should be done on separately(monthly) if salary or HRA has varies during the year.
  6. No,Hra exemption if House rent  paid is less than 10 % of salary.
  7. Again exemption is denied where an employee lives in his own house, or in a house for which he has not paid any rent.
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QUS:Is it necessary to submit House rent paid receipts to the employer,if yes,should the rent receipt include pan of the Land lord.

Ans:Employer are liable to deduct tds on salary and in present senario of annexure less income tax return ,there is more responsibility on DDO to check and verify each and every exception and deduction that employees claim .DDOs is empowered under income tax act to get and verify proof to saving and hra receipt from employees.However CBDT has exempted the employees who are receiving hra upto 3000 per month from submitting the proof to DDO(Employer) though Income tax assessing officer can demand Rent receipt from employee getting HRA upto 3000 pm.

Ques:Am I eligible for HRA exception if I have Paid rent to my father.

Ans:If you have actually paid the rent to your father then you can claim the benefit .


Ques:Am I eligible for HRA exception if I have Paid rent to my wife/husband.

Ans:If you have actually paid the rent to your spouse you can claim the hra exemption benefit but the house should not be purchased by your spouse from funds transferred by you without adequate consideration ,in that case you will be the deemed owner of the house and clubbing provisions will attract.More over my advice is here that we should avoid fake claim.

Update :Landlord's Pan mandatory for payment exceed more than Rs 1,00,000 per annum wef financial year 2013-14
Important :Landlord pan is mandatory if rent paid iss in excess of Rs  180000/- read more here(fy 2011-12 & 12-13)

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