House Rent Allowance (HRA) Rules and Tax Exemption

What is HRA (House Rent Allowance ) 

House Rent Allowance (HRA) is best tax saving tools available to employees. With these you can save upto 50% of your salary if you reside in Metro (40% of your salary if you reside in non-metro).

As per income Tax act, for calculation House rent allowance least of the following is available as deduction :

  1. Actual HRA received
  2. 50% / 40%(metro / non-metro) of basic ‘salary’
  3. Rent paid minus 10% of ‘salary’. Basic Salary for this purpose is basic+ DA forming part+ commission on sale on fixed rate.

Cities Like, Delhi, Mumbai, Chennai and Kolkata constitutes Metro. All cities other than these are non-Metro. So if you resides in cites like Gurgaon, Faridabad, Bangalore, Hyderabad, etc it would constitutes as Non metro and only 40% deduction will be allowed.

 

If actual rent paid is lower than 10% of your basic salary you receive no exemption. The other key point is that you cannot claim any exemption under this section if you live in your own home or if you are not paying rent to anyone.

You can download HRA Calculator from here

4 Responses to House Rent Allowance (HRA) Rules and Tax Exemption

  1. Shine kumar says:

    My monthly salary basic pay is 16230, and I am paying a rent of Rs.6500/- per month. My HRA is Rs.6489/- per month. During my provisional income tax calculation, I am getting only Rs.28402/- as HRA exemption for the whole year, is it right or not. If it is wrong, what will be my actual exemption eligibility. Please provide the calculation also. I am staying in navi Mumbai.

  2. zahoot Ahmed says:

    My gross salary is 277396 and Iam receiving hra Rs 14960 and I am paying rent Rs 20000 how much rebate on hrs

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