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Computation of House Rent Allowance (HRA) - [Section 10(13A) AND RULE 2A] - Salary Income - Income Tax

Computation of House Rent Allowance (HRA) - [Section 10(13A) AND RULE 2A]
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HOUSE RENT ALLOWANCE  [Sec. 10(13A) AND RULE 2A]

1. HRA is given by employer to employee to meet the expenses in connection of a rented house taken by the employee for his stay. The Income Tax Act allows for deduction in respect of the HRA paid to employees.

2. An employee can claim exemption on his HRA. In order to claim the deduction, the employee must actually pay rent for the house which he occupies and the rented premises must not be owned by him.

3.  HRA is exempt u/s 10(13A) to the extent of minimum of the following three amounts:-

1)      Actual house rent allowance received from your employer

2)      Actual house rent paid by you minus 10% of your basic salary

3)      50% of your basic salary if house is situated in metro cities (Mumbai, Calcutta, Delhi, Chennai) or 40% of your basic salary for any other place

           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.
  • Where the employee has not actually incurred any expenditure on payment of rent, then no exemption of HRA is available.

NOTE:-

  •  Allotted HRA cannot exceed more than 50% of your basic salary.
  • Tax benefits of HRA along with a home loan can also be availed.
  • In case you stay with your parents, you are eligible to pay rent to your parents and collect a receipt for HRA claim. However, similar rules don't allow you to pay rent to your spouse and claim a tax exemption.
  • If the annual rent of your accommodation exceeds ₹ 1,00,000, then presenting the landlord's PAN card/self declaration (in case he does not have a PAN card) is mandatory.
  • In case your landlord is an NRI, you must deduct 30% tax from the rent amount that needs to be declared.

 

 

 

 

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