- least of following three will be exempted
- Hra received
- 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.
- rent paid in excess of 10 % of salary
- Salary for this purpose mean
- Basic salary
- Dearness Allowance if terms of employment so provides.
- commission based on a fixed percentage of turnover.
- all other allowances and perquisites is to be excluded.
- Salary related to period of rent should only be considered on due basic .
- Salary received in period as advance or arrears not related to calculation period should not be included.
- 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.
- The calculation should be done on separately(monthly) if salary or HRA has varies during the year.
- No,Hra exemption if House rent paid is less than 10 % of salary.
- Again exemption is denied where an employee lives in his own house, or in a house for which he has not paid any rent.
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)