What is HRA?
House Rent Allowance (HRA) is a component of a salary package offered by employers to employees. It helps cover accommodation costs and can provide income tax benefits under certain conditions.
How is HRA Exemption Calculated?
The tax-exempt portion of HRA is the minimum of the following three values:
- Actual HRA received from employer
- 50% of basic salary (for metro cities) or 40% (for non-metro)
- Rent paid minus 10% of basic salary
The remainder is considered taxable and added to your income.
Benefits of HRA Exemption
- Reduces taxable income, saving money on taxes
- Encourages accurate declaration of rent expenses
- Flexible for salaried employees living in rented homes
How to Use the HRA Calculator
Enter your monthly basic salary, HRA received, rent paid, and select whether you live in a metro city. The calculator will show your tax-exempt HRA amount and how much HRA is taxable.
Frequently Asked Questions (FAQs)
What is HRA?
HRA is an allowance employers give employees for paying house rent. It's partially exempt from tax depending on salary, city, and actual rent paid.
Is HRA available to all salaried employees?
Only employees who live in rented accommodation and receive HRA from their employer can claim exemption under Section 10(13A).
How do I calculate HRA for a non-metro city?
Use 40% of basic salary instead of 50% when calculating the HRA exemption for non-metro cities like Bangalore, Pune, or Ahmedabad.
Do I need PAN of the landlord to claim HRA?
If rent exceeds Rs. 1,00,000 annually, the PAN of the landlord is generally required by the employer while processing HRA exemption.