House Rent Allowance (HRA) Calculation

House Rent Allowance (HRA) Calculation

WHAT IS HRA ?

House Rent Allowance or HRA is a part of the salary provided by an employer to his employee for his rented accommodation.  It forms part of the salary paid by the employer to their employee.

How is Exemption on HRA calculated ?

Mentioned below are the 3 provisions based on which the actual HRA is calculated. The lowest amongst these 3 HRA calculations is considered for deduction.
  1. The HRA amount received from the employer
  2. Actual amount paid for rent minus 10% of basic salary
  3. 50% HRA if the employee is staying in a metro city and 40% HRA for non-metro cities
Same Calculations are shown in Software also.

            

Example :

We can use a example of Person A to identify the HRA payable. If we consider that he lives in Delhi at accommodated premises for which he has to spend Rs 12,000 every month, the following is his pay structure breakdown based on our HRA calculator.
Salary componentTotal amount (each month)
Basic salaryRs 23,000
HRARs 15,000 
Conveyance allowanceRs 3000
Medical allowanceRs 1250
Special allowance under other headsRs 2300
Adding the components, we identify that Individual A has a monthly salary of Rs 44,500.
Based on the three heads mentioned above, using our HRA allowance calculator, the figures that are churned out are:
Actual rent paid minus 10% basic or Rs 9700
HRA the employer offers is Rs 15000
50% of the basic salary is Rs 11,500
Since the least of these 3 sums is calculated as HRA, Individual A has to pay Rs 9700 as HRA. It will be exempted from his taxable income.

    • Related Articles

    • What is Marginal Relief & its calculation above 2 Crore

      Marginal Relief calculation above 2 Crore Marginal relief will be provided to certain taxpayers up to the amount of the difference between the excess tax payable (including surcharge) on the income above Rs.50 lakhs, 1Cr and 2 Cr  and the amount of ...
    • Calculation of Minimum Alternative Tax (MAT)

      Calculation of Minimum Alternative Tax (MAT) Minimum Alternate Tax (MAT) Tax liability as per the MAT provisions are given in Sec 115JB(18.5 % of Book Profits Plus 4 % education cess plus a surcharge if applicable). The tax rate is 15% with effect ...
    • TDS - Tax Calculation for Senior Citizens (Assessment Year 2021-22)

      TDS - Tax Calculation for Senior Citizens Tax slab 2021-22 (Old tax regime slabs) (who is 60 years or more at any time during the previous year) Net Income Range Rate of Income-tax Assessment Year 2021-22 Assessment Year 2020-21 Up to Rs. 3,00,000 - ...
    • Interest Calculation - If challan paid via book entry

      Interest Calculation - If challan paid via book-entry TDS Payment Due Date  - If paid via book-entry- the same day on which TDS is deducted,  When a part or whole amount of TDS is not paid then 1.5% per month interest is subject to TDS/TCS amount ...
    • Deprecation calculation as per companies act 2013 in Income Tax

      Deprecation calculation as per companies act 2013 Depreciation is the systematic allocation of the depreciable amount of an asset over its useful life. The depreciable amount of an asset is the cost of an asset or other amount substituted for cost, ...