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HRA Calculator
Your monthly income is comprised of different allocations, including your travel allowance, provident fund contribution, and more. One key element in this allocation mix is your House Rent Allowance (HRA). Provided by your employer, the HRA is intended to cover the money you spend on rent each month. Understanding the nuances of HRA becomes even more critical when you factor in tax exemptions, which are available under section 10 (13A) and Rule 2A of the Income Tax Act, 1961.
HRA tax exemption is applicable only if you reside in rented accommodation. To determine the extent of your exemption, you can utilize tools like the HRA tax exemption calculator or the HRA calculator online, which streamline the process. This not only simplifies your calculations but also ensures accuracy.
Now, let's delve into the HRA calculation formula. The calculation typically takes into account factors such as the actual rent paid, the HRA received, and certain other considerations outlined in the Income Tax Act. To make this process more efficient, consider using an HRA tax calculation tool, which often incorporates the HRA calculation formula.
Understanding the dynamics of HRA and its tax implications is vital for maximizing your exemptions. Using tools like the HRA calculator online or the HRA tax exemption calculator can simplify the process, allowing you to make informed decisions about your finances.
What is HRA?
House Rent Allowance (HRA) is described as an allowance that an employer offers an employee towards the rent of his residence. This component is part of the salary paid by an employer to an employee. The HRA calculation includes a range of factors, including the salary, city of residence, the salary structure in a company, and more. When doing the HRA deduction calculation, employers offer a fixed percentage of your basic salary. Besides, HRA tax calculation is also applicable, since it is possible to claim a tax exemption on your HRA under Section 10(13A) and Rule 2A of the Income Tax Act, 1961.
HRA for Salaried individuals:
If HRA received from the Employer: In case of individuals receiving HRA from its employers, can claim deductions under section 10(13A) read with Rule 2A of Income Tax Act, 1961
If HRA is not received from the Employer: In case of individuals not receiving HRA, can claim deduction of rent paid under section 80GG of Income Tax Act, 1961.
HRA for Self Employed Individuals:
Individuals who are self-employed can claim the deduction of rent paid under section 80GG of Income Tax Act, 1961.
How to calculate HRA exemption on your salary in India?
Before we get down to the calculation, it is important to note that the salary here is a combination of the basic salary plus the dearness allowance, and other commissions.
The exemption limit is the lowest of the three heads mentioned:
- Actual HRA Received
- 50% of (Basic salary + Dearness Allowance) for those living in Metro Cities / 40% for those living in Non-Metro cities
- Actual Rent paid (-) 10% of Basic Salary + DA
How is HRA taxation calculated in India?
Use the HRA tax exemption calculator to make the HRA tax calculation easily. As a ground rule, if the annual payment of rent is above Rs 1 lakh, it is compulsory for an employee to provide the PAN details during the time of filing income tax returns.
Let’s take an example to understand this better, and figure the HRA calculation for income tax.
Say for example, there is an individual who lives in Mumbai, and pays a monthly sum of Rs 25,000 towards rent. His basic salary is Rs 45,000 along with a dearness allowance of Rs 7,000, which is also a component of this salary. As part of the salary structure in his company, he receives Rs 1 lakh annually from his employer towards HRA.
Particulars |
Amount (in Rs.) |
Actual HRA received |
1,00,000 |
50% of [(45,000+7,000)*12] |
3,12,000 |
Actual rent Rs 3,00,000 minus 10% of [(45,000+7,000)*12] |
2,37,600 |
HRA deduction (Least of above) |
1,00,000 |
In this case, the HRA tax exemption would be Rs 1 lakh, which would be exempt from his salary under Section 10(13A) of the Income Tax Act, 1961.
There may be certain cases, where an employee is paying rental expenses but does not get an HRA allowance as part of his salary structure from a company. In that case, they can still claim the HRA tax exemption under Section 80GG of the Income Tax Act, 1961.
How to use the HDFC Life HRA calculator?
The monthly income you earn has various allocations, such as travel allowance, provident fund calculation and more. House Rent Allowance (HRA) is one such allocation—HRA calculation can happen in simple steps. Your employer offers this allowance for the money you pay as rent each month. There are certain HRA tax exemptions available under Section 10(13A) and Rule 2A of the Income Tax Act, 1961.
However, HRA tax exemption is available only on rented accommodation. Let’s learn more about the HRA and ways to calculate HRA tax exemption. The easiest way to do it is to use an HRA calculator online.
Here’s a step-by-step guide on HRA calculation with the online HRA calculator by HDFC Life:
- Fill in the basic salary received, dearness allowance, HRA received and total rent paid annually. Also, select if you stay in a metro city or not.
- Once you have filled in all the details, the online HRA calculator by HDFC Life will give you complete information, including the amount of HRA exempted and HRA chargeable to tax.
What are the benefits of HRA calculation using this calculator?
There are several benefits of using the HRA tax exemption calculator:
- The HRA calculator online that you use will never make errors. If you want to test it out, you can use it several times to be doubly sure.
- Based on the HRA deduction calculation, you can claim your right to tax exemptions under the Income Tax Act, 1961.
- The HRA tax exemption calculator also takes care of all the variables that are a part of the HRA calculation.
How is HRA exemption calculated for special cases?
There are certain special cases that must be accounted for, while going for an HRA deduction calculation.
- If you own a house in a different city: Say you are living in X city but own a house in another one, you can still claim HRA. Plus, if you are paying home loan EMIs for the house, you are also eligible for a tax deduction under Section 10(13A). You can find out the details simply by using the HRA exemption calculator.
- If you pay rent to your family members: It’s a special case if you pay rent to your family members. But even then, you can claim an HRA deduction if you are able to furnish rent receipts and the rental agreement as proof. The process remains the same; you can easily make the HRA calculation using the online HRA calculator, as well as the HRA calculation for income tax. However, you cannot get this benefit if you own the property or if it is owned by your spouse.
- Rent shared with your spouse: Under these circumstances, HRA deduction can be claimed but only by one person. In caseyou can manage to furnish rent receipts for rental payment, then it is possible to claim HRA exemption separately, by both individuals. But make sure there is no duplication that happens because it could lead to heavy questioning and severe consequences by the tax department.
- In Case of Non Receipt of HRA : If you stay in a rented accommodation but do not receive HRA from your employer or you are Self Employed you can still claim deduction under Section 80GG.
Conditions to be fulfilled :-
- Self Employed or Salaried
- HRA should not have been received anytime time during the year
- You or your spouse should not own any residential house in the current place of business or employment
- Section 80GG
Eligibility: Deduction under this section can only be availed if you are paying rent but not receiving HRA u/s 10(13A)
- Deduction Limit:
Least of the following will be exempted from tax:- 5000 per month;
- 25 % of Adjusted Total income1
- Actual Rent Paid (-) 10% of Adjusted Total Income1
To claim 80GG deductions, you must submit Form 10BA along with your income tax returns (ITR), along with rent receipts, your rental agreement.
Important Rules to Remember for HRA Deductions
- You cannot claim an HRA tax exemption if you are paying rent to your spouse.
- In case the landlord is an NRI, a 30% TDS (Tax Deducted at Source) will be deducted from rent.
- Employees living in their own homes and receiving HRA are not eligible for exmeption
- Maintenance charges paid for your apartment cannot be included for tax exemption. HRA deductions are specifically allowed for rent payments only. Expenses such as maintenance charges, electricity charges, utility payments, and similar costs are not considered eligible for tax exemption.
What are the documents required to claim HRA deductions?
These are some of the documents that are required to claim HRA deductions:
- Furnish rent receipts that clearly mention the date, landlord’s and tenant’s name, PAN details of the landlord, the address of the rental accommodation, stay duration as well as rent receipt with a revenue stamp that has been cross-signed by the landlord.
- In case your employer does not offer HRA deduction, you can still claim the HRA exemption under Section 80GG of the Income Tax Act by submitting your PAN details and a copy of the PAN of the landlord, if the rent paid exceeds Rs 1 lakh annually. You will also need a copy of the rental agreement. This rule is applicable even if you are paying rent to your family members. You may also have to show financial transactions made through copies of bank statements.
FAQs on HRA Calculations
1 Can I get a tax rebate if I am staying in my own house?
No, you can only get a tax rebate on HRA if you reside in rented accommodation.
2 Can I get both HRA tax exemption and tax rebate on my home loan?
Yes, if you’re repaying a home loan while living in rented accommodation, you can get both the HRA tax exemption and a tax rebate on your home loan. However, you may have to show that the home you own is very far away from your place of work.
3 What should I do if my landlord doesn’t provide his or her PAN?
Unfortunately, you need your landlord’s PAN to avail any HRA tax exemption over INR 1,00,000 per year.
4 Can I claim HRA by paying rent to my parents?
Yes, you can. The exemption is only available if your parents own the house and they declare the rental income provided by you in their income tax returns.
5 How to calculate HRA exemption in your salary?
HRA calculation in salary is done by selecting the lowest of all the components mentioned: the amount of HRA received by the employee; 50% of the basic salary + Dearness allowance, if the employee stays in a metro or 40% of the basic salary + Dearness allowance if the employee lives in a non-metro city and actual rent paid by the employee (-) 10% of basic salary + Dearness allowance.
6 How is HRA exemption calculated?
The least of the following three is considered to calculate the HRA tax exemption: HRA received from your employer; actual rent paid minus 10% of salary or 50% of basic salary for those living in metro cities.
7 What is the formula for calculating HRA?
HRA calculation in salary is done by selecting the lowest of all the components mentioned: the amount of HRA received by the employee; 50% of the basic salary, if the employee stays in a metro; 40% of the basic salary if the employee lives in a non-metro city and actual rent paid by the employee-10% of basic salary.
8 Is HRA 50% or 40%?
It is 50% of the basic salary, if the employee stays in a metro; 40% of the basic salary if the employee lives in a non-metro city
9 What is the HRA limit for 2024?
It is the minimum of the following: the amount of HRA received by the employee; 50% of the basic salary, if the employee stays in a metro; 40% of the basic salary if the employee lives in a non-metro city and actual rent paid by the employee-10% of basic salary.
10 How do I claim maximum HRA?
Your allotted HRA cannot exceed more than 50% of your basic salary.
11 Who is eligible for HRA?
To be eligible for the tax benefit on HRA, you need to:
- be a salaried individual,
- have the HRA component in your salary structure, and.
- stay in a rented accommodation.
12 What is the maximum HRA limit?
Your allotted HRA cannot exceed more than 50% of your basic salary.
13 How much HRA can be claimed without any proof?
If your HRA is up to Rs 3,000 per month, you can claim HRA without any proof.
14 What are the new rules regarding HRA?
As per existing rules, the HRA limit is the lowest among the following: the amount of HRA received by the employee; 50% of the basic salary, if the employee stays in a metro; 40% of the basic salary if the employee lives in a non-metro city and actual rent paid by the employee-10% of basic salary.
15 Can I claim HRA is not mentioned in Form 16?
If for some reason Form 16 doesn’t have any information about HRA then you can claim tax deduction on rent paid under section 80GG
16 Is HRA part of 80C?
No, HRA is not included in 80C of income tax Act, 1961. Section 80C provides deductions for certain investments whereas HRA is an exemption.
17 Can HRA and 80GG both be claimed at the same time?
No, HRA and 80GG both cannot be claimed at the same time.
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ARN - INT/MC/12/23/7045