Allowance is a fixed monetary amount paid by the employer to the employee, Whether personal or for the performance of his duties. These allowances generally taxable unless a specific deduction/exemption is provided by law. So in this article we will discuss about House Rent Allowance broadly. So you can understand and calculate it very easily. Please read complete article including the notes given at the end of the article.
House Rent Allowance (HRA) is give by the employer to the employee to meet the expenses in connection with rent of the accommodation. HRA is exempt under section 10(13A) to the extent of the minimum of the following three amounts :
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- Actual House Rent Allowance received by the employee
- Excees of rent paid for the accommodation occupied by him over 10 % of the salary.
- 50% of salary where the residential house is situated at Mumbai, Calcutta, Delhi or Chennai and 40% of the salary where the house is situated at any other place.
The minimum of the above three amounts shall be exempt from tax and the balance shall be taxable and thus included in gross salary of employee.
Meaning of Salary for calculation the exemption of HRA
- Salary means (Basic + D.A + Commission based on fixed percentage on turnover).
- Salary is to be taken on due basis in respect of the period during which the period accommodation is occupied by the employee in the previous year.
Calculation Monthly or Yearly?
The exemption in respect of HRA is based upon the following factors:
- Salary
- HRA received
- Place of Residence,
- Rent Paid,
HRA exemption should not be calculated on yearly basis, if there was any change in above factors during previous year.
Examples for calculation of exemption/deduction of HRA
X has received following amount during the previous year.
- Basic Salary – Rs. (5000*12) – Rs. 60,000/-
- Dearness Allowance (D.A) – Rs. (1000*12) – Rs. 12000/-
- House Rent Allowance (H.R.A.) – Rs. (2000*12) – Rs. 24000/-
- Actual Rent Paid – Rs.(2000*12) – Rs. 24000/-
Calculation
The minimum of the following amount shall be exempt
- Actual HRA received (2000*12) – Rs. 24000/-
- Rent Paid in excess of 10% of salary ( 24000-7200) – Rs. 16800
- 40% of Salary – Rs. 28800/-
Therefore, Rs. 16800 shall be exempt and the balance Rs. 7200 shall be included in gross salary.
Important Notes:
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{ 18 comments… read them below or add one }
If an employees received arrear of Fixed HRA in the m/o October then what will be the treatment given to the HRA received duriing the m/o April to Sep 09? Is this arrear of HRA will be treated for the October or it will be spread for last six month also. If yes then how? The employer has already file TDS return.
The arrear of House Rent received in the month of October will be spread to the months to which it pertains and the difference of tax for those months i.eApril to September after inclusion of the relevant portion of H.R.arrears will be deducted now and shown in the nextTDS Return to be filed on the due date.
A small question, My Landlord doesnot want to give me PAN no on rent receipt neither we have a rent agreement in place. he is giving me rent receipts but Not with the PAN no. My company is insisting to get either the PAN no of landlord or a signed rent agreement with landlord. in case of not furnishing one of the two all HRA will get taxable. It is a income tax departments’ requirement or they are just fooling us? if yes, please provide me with the neccessory notification.
i am a state govt. employee and residing at govt. housing and the rent of the same is directly deducted from my salary in the pay bill. Now my query is as i am not drawing HRA whether my HRA will be included in my gross salary and then be deducted from that or not? if yes then why and if no then under which rule?
Rent & Housing loan can both take benifit .
Just Building is on process but installment deducted and bank give statement of principal and interest . and also staying paying guest pay the rent that time take both benifit possible.
Please reply.
chandu_20034@yahoo.com
If I am owner of house then also I will be eligible for HRA.
In some rented house the consolidated amount for water and electricity is included. In that case whether the complete amount is to be consider as rent or it should be purely house rent for taking HRA benifit
my father was retired from delhipolice on 31/06/2006 after retirement of service my father was occupied the govt house on basis of normal fee i.e., 1month rent free, 3month normal fees i.e., 183/pm, next four month is double fees i.e., (183*2)pm , next months from 1.4.2007 to date of deposited the house the rent is as on 1/4/2007 to 10/6/2008 rs. 6105/-pm.
in the mean time I am selected the govt job(date of joining 01.04.2007) and reside with her in the govt house.
my question is I am claim the house rent allowance from the date of joining as 16.04.2007 .
i am professional. my income rs. 260000 p.a rent paid rs. 60000 p.a. How much amount deductions in HRA or rent
Plz clarifiy what the is Actual Rent Paid ? like ex: hra received is 2500 per month and i am paying actual rent is 3000 per month for HRA computation actual rent paid to be considered?
thnx
I am Rama Krishna My Income Rs.3,60,000/- P.A rent paid 96,000/- P.A how much amount deductions in HRA
if there is any change any factors of HRA then the actul treatment will change or not
Sir,I want to know that,is there any changes in the calculation of TDS on HRA from 01.04.2009,after the abolition of FBT
my gross salary per month is 40000/-. i do not get hra from employer but i pay 5000/- per month as house rent. im in indore. how much exemption i can get.
sir I want to know can i claim HRA exemption in case i have no Rent agreement from Landloard.
Sir, Is it necessary to produce rent details and actual rent slip for HRA exemption against D.D.O.
sir, Is it necessary to take Rent slip and any other relevant document when employees take benefit HRA exemption
I am D.D.O. of our institute and employee wants to get exemption under Section 10 (13A),which document is to be furnish for exemption under Section 10 (13A) HRA deduction by employee