Finance

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

Posted Vinaya HS

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.

310 thoughts on “How to Calculate the Income Tax Exemption on House Rent Allowance (HRA)?”

  1. 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

  2. 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.

  3. 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.

  6. 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.

  7. 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

  8. 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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