How to Calculate the Income Tax Exemption on House Rent Allowance (HRA)?

by Vinaya HS on January 5, 2007

in Finance

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If you happen to be a salaried employee claiming House Rent Allowance (HRA) from your employer, you are eligible for an Income Tax exemption under Section 10(13A) of the Income Tax Act. How do you calculate this exemption amount? Simple.

Find the minimum of the following three options:

  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 you live in a metro or 40% of your basic salary if you live in a non-metro

This minimum figure is the allowed income tax exemption on house rent allowance. It’s prudent to work this out so that you can structure the other components of your variable pay better.

Have you ever looked close at the statement of tax generated each month (along with your salary slip) by your employer? Do you understand where your money is going? If no, it’s high time you did.




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{ 310 comments… read them below or add one }

prerana yogesh barve July 20, 2012 at 10:08 AM

I am receiving hra from my employer and I am staying with my mother in law and pay her rent every month,pl let me know whether i can claim tax exemption

chethana July 20, 2012 at 7:32 PM

sir i have one file that form 16A she receives fees as income and she made some expenses
where these expenses has to be shown how to fill ITR4 what time of bunisess it is .whetherwe have to create profit and loss or not.what income we have to show.please repaly as soon as possible.

Pavan July 23, 2012 at 7:46 PM

I am purchasing flat from New bulding . I am purchasing it jointly along with my wife name. The house loan sanctioned is against my name along with coaplicant is my wife. My wife has no income.

Please suggest whether i will continue to get HRA exemption from my employer & if not what should i do to get this exemtion & Housing loan interest.

sourav October 13, 2012 at 9:10 AM

i receive 2697 pm as hra. i pay 3000 pm as rent to my landlord. can i get tax exemption,if so how much? i stay in non metro city. is rent receipt necessary for tax exemption?

Varsha Khichi February 16, 2013 at 3:07 PM

I am receiving hra from my employer and I am staying with my brother in joint family for rental basis and I am pay 50% rent paid out of total rent every month,pl let me know whether i can claim tax exemption

suresh gupta March 4, 2013 at 5:38 PM

my salary is rs 19000 per month and i am received rs 3000 per month as a hra from my employer and rs 1000 as conveyance total salary is rs 23000 per month kindly let me know that how can i calculate my taxable income.

indrajit sahay March 15, 2013 at 11:15 PM

sir. my basic salary rs.18500 per month and i am received rs 1295 per month as a hra from employer and d.a rs 13300 and actual rent paid rs 3000 per month kindly let me know that how can i calculate my taxable income

Anand Joshi March 28, 2013 at 2:52 PM

What is included in the definition of The “basic pay” for the govt servants?
After 6th pay commission report implementation the pay is divided in Basic pay & grade pay.While basic pay is ‘pay in the pay band’, the grade pay is fixed for every post.
Govt pays HRA on the full amount (i.e. basic pay +grade pay).

In the times of older pay structure, HRA was paid on Pay + Dearness Pay(DP was 50% of pay). But for calculating HRA exemptions we used to take only ‘Pay’ in consideration. What should be done now? Now, while calculating 10% or 40% of the basic pay which amount should be taken?

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