HRA Calculator utility allow you to know how much exemption on HRA will you get.

What is House Rent Allowance or HRA?

House Rent Allowance & HRA is the part of the salary paid by the employers to employee to provide the tax benefits each year as per the Indian Tax Law. HRA amount paid to employee by employer based on certain criteria like the salary and the city of residence.The house rent allowance is regulated by the provisions of Section 10(13A) of the IT Act.

Self employed individuals exempt to avail the tax benefits of HRA, only salaried individuals can get the benefits of House Rent Allowance if they are living in rented accommodations. In case the employee lives in his/her own house and does not pay any rent, he/she cannot claim HRA.

PAN number is required of the landlord if the rent paid by the employee exceeds Rs. 1 Lakh in one financial year while submitting HRA claims to the employer.

How to Calculate HRA ?

HRA is calculated on the basic salary , dearness allowances and any other commissions. If the employee is not receiving a dearness allowance (DA) then the HRA will be 50%/40% of the basic salary based on residence city of employee.

HRA calculation is based on the lowest of the following three provisions:

• The amount received as the HRA from the employer.
• Actual rent paid less 10% of the basic salary.
• 50% of the basic salary if staying in a metro city and 40% in a non-metro city.

How to claim HRA?

To allow you exemption on HRA, it is mandatory for the employer to collect proof of rent payment. The employer will give you exemption on HRA based on rent receipts. Your final tax liability will be calculated accordingly. Your TDS shall be adjusted so you don’t have to pay tax on HRA.

If the rent paid every month is up to or less than Rs. 3,000 then rent receipts need not be provided. If the monthly rent does exceed Rs. 3,000 then rent receipts will be needed.