HRA Exemption

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HRA Exemption

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Worried about HRA?
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Contents

• What is HRA?
• Who gets House Rent Allowance?
• What are the Benefits of HRA?
• HRA Exemption
• How to Calculate HRA from Basic Salary?

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What is HRA?

• House Rent Allowance is a benefit provided by the
  employer to his employee for his residential
  purpose. A Salaried assesse who lives in a rented
  house can claim HRA or House Rent Allowance to
  lower taxes.

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Contd.

• The HRA is an amount given by the employer to his
  employees as a part of Salary to meet the
  expenses in connection with rent of the
  accommodation.
• House Rent Allowance is an allowance given with
  the salary. If you dont live in rented
  accommodation, this allowance is fully taxable.

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Who gets House Rent Allowance?

• Only salaried Individuals gets the benefits of
  House Rent Allowance.
• HRA exemption is also available only if the
  Salaried employee is living in rented
  accommodations rather than an own house.
• Most of the employers include House Rent
  Allowance in the salary package. The HRA (House
  Rent Allowance) is beneficial to both the
  employer and the employee.

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Who cant Get House Rent Allowance?

• Self-employed individuals are exempt from
  claiming HRA Exemption.
• The Private or Government Salaried assesse who
  get accommodation, do not get the HRA allowance.

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What are the Benefits of HRA?

• The most important benefit of HRA is the tax
  exemption. 
• The inclusion of House Rent Allowance (HRA) in
  your salary saves a huge portion of the tax. For
  most of the employee, this allowance is one of
  the best saving method. 
• The House Rent Allowance is also beneficial to
  your employer. Your employers do not give money
  for your HRA allowance from their pocket.
• Rather, organization take out some part of your
  basic salary and allot it to you as the HRA. So
  there is no extra expenditure to the employers.

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HRA Exemption

• HRA Exemption under Section 10 (13A) of the
  Income Tax shall be the least as follows.
• Actual HRA received from your employer/Organizatio
  n.
• Actual house rent paid by the salaried assesse
  minus 10 of basic salary.
• 50 of basic salary along with dearness allowance
  if you live in a metro or 40 of the basic those
  living in metro cities for non-metros.

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HRA is regulated by the provisions of Section
10(13A) of the Income Tax Act, 1961
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