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HRA Exemption Calculator

The House Rent Allowance (HRA) is a vital component of employees' salary structures, providing financial relief for those who incur rental expenses. It's a part of the salary that's specifically meant to cover the cost of renting a home.

 

But do you know about HRA exemption under the Income Tax Act? You can use it to save on taxes!

 

Here’s how it works.

What Is an HRA Calculator?

However, not the entire HRA amount is tax-free, but you can use our HRA calculator to determine the exempt portion.

Here’s how you can use it.

As it is clearly visible, our HRA exemption calculator is pretty straightforward to use. All you need to do is enter the following information.

  • HRA received

  • Basic Salary

  • Rent Paid

  • Specify whether you live in a metropolitan city.

 

Let’s understand this more with an example.

 

Suppose Naina works in a company named XYZ, located in Jaipur. Here, her

  • Monthly salary is ₹ 800000

  • Dearness Allowance is ₹ 70000 p.m, and

  • Actual HRA is ₹ 25000 p.m.

  • Monthly Rent ₹ 20000

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The Exempt HRA will be least of the following : 

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(a) 40% of Basic Salary + DA

(b) Actual HRA

(c) Excess of Rent paid over 10% of Basic Salary + DA

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Here : 

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  • Salary = base salary + DA = (80000+70000) * 12 = INR 20,40,000

  • HRA paid monthly is INR 25,000 or INR 3,00,000 per year.

  • Rent is INR 20,000 per month or INR 2,40,000 per year.

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She lives in a non-metropolis city, so 

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(a) 40% of Salary (Basic + DA): 40% of INR 20,40,000 = INR 8,16,000

(b) Actual HRA is 3,00,000 p.a.

(c) Excess of Rent paid over 10% of Salary will be 

Rent paid - 10% of Salary (Basic + DA): INR 2,40,000 - INR 2,04,000 = INR 36,000.

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Thus, Naina is eligible for a tax deduction of INR 36,000 based on HRA.

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Get Experts Help & Maximize Your Tax Benefits Today!

How Much HRA is Tax Exempted?

The whole amount of HRA is not tax-exempt and depends on the three factors below.

 

  • Actual HRA Received: This is the total amount of HRA you receive from your employer as part of your salary.

 

  • 50% of Salary (for individuals living in metro cities) or 40% of Salary (for those living in non-metro cities): This is a standard percentage of your basic salary (including dearness allowance, if any).

 

  • Rent Paid minus 10% of Salary: The actual rent you pay for your accommodation minus 10% of your basic salary.

Required Documents For Claiming HRA?

The documents below are required to claim HRA.

  • Original rent receipts with details such as the landlord's name, address, and contact information.

  • PAN (Permanent Account Number) details of the landlord if the annual rent paid exceeds Rs. 1,00,000.

  • Copy of the rental agreement signed between the tenant and the landlord.

Advantages of Using HRA Calculator

  • Our calculator accurately calculates the part of your rent allowance that you don't have to pay taxes on.

  • It's quick, easy, designed for everyone, and makes no errors.

  • This helps you plan your finances better, knowing how much you can save in taxes.

Frequently Asked Questions (FAQs)

1.What Is an HRA exemption calculator?

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The HRA exemption calculator helps individuals estimate the House Rent Allowance (HRA) exemption they can claim while filing their income tax returns. It considers your salary, HRA received, actual rent paid, and the city of residence to calculate the HRA exemption.

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2.Can taxpayers claim HRA and 80GG simultaneously?

No, taxpayers are not allowed to claim HRA and 80GG simultaneously.

 

3.Who is eligible for HRA exemption?

Salaried individuals who live in rented properties and get HRA as part of their salary are eligible for HRA exemption.

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4.What are the limits of HRA exemption?

The three limits of HRA exemption include, (least of them)

  • Actual HRA received

  • 50% of the salary for employees living in metro cities or 40% for non-metro cities.

  • Annual rent paid reduced by 10% of salary.

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5.Can HRA be claimed along with home loan deductions?

Yes, claiming both House Rent Allowance and home loan deductions simultaneously is possible.

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6.Can the individuals working independently or running their own businesses claim HRA?

House Rent Allowance is a benefit given by employers to employees to cover their rental expenses. However, self-employed individuals who work for themselves and do not receive a salary from an employer can not claim HRA because they are not in an employer-employee relationship. In simple terms, it is designed as a salary component for employees who incur rental expenses.

 

7.Is it possible to get HRA benefits when I live in a city different from my workplace?

Absolutely! You are eligible to claim House Rent Allowance (HRA) even if you reside in a different city than where you work, as long as you are paying rent for your accommodation.

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