What is house rent allowance?
House Rent Allowance (HRA) is the allowance or amount paid by the employer to the employees to cover up their living expenses. This amount can vary from place to place depending on the organisation's criteria and conditions. HRA is included in the salary package and depends on your position in the company. HRA is applicable to both self-employed and salaried people. HRA is provided for under section 10 (13A) of the Income Tax Act and Rule 2A of the Income Tax Rules for salaried employees. Self-employed persons, on the other hand, are not eligible for HRA exemption under this provision however can claim tax benefits under section 80GG of the Income Tax Act.
Pay rent using NoBroker Pay and get rent receipts onlineHow to calculate house rent allowance?
You should consider the factors like salary, actual rent paid, HRA received and city where you live while calculating HRA. The least amount from these below values is eligible for HRA exemption.
For Example,Suraj has a monthly basic salary of Rs.60000 and receives a house rent allowance of Rs.20000. He is paying Rs.10000 house rent per month.
HRA as per 50% of the salary = 50% of 60000 = 30000
Rent paid - 10% of basic salary = 10000 - 10% of 60000 = 10000 - 6000 = 4000
Actual HRA received = 20000
So, he can claim a tax amount on HRA of Rs.4000 monthly as it’s the least amount amongst the three values.
Rules of HRA:
1) Rent receipts must be shown as evidence in order to qualify for the tax deduction.
2) If the rent paid surpasses one lac rupees per, the landlord's PAN number is needed.
3) HRA is computed at 40% of the base income for employees in non-metro cities, and 50% of the basic salary for those in metro cities like Mumbai or Chennai.
4) You can claim HRA if you pay rent to both parents and landlord by providing receipts.
5) HRA is not tax-free if the employee lives in his or her own home.
Now you should have understood what is house rent allowance.
Here you can calculate HRA on the government's official website. Get your agreement done at your doorstep with NoBroker here. Read More: Can you claim house rent allowance for the rent paid in another city? How to calculate house rent allowance? How to calculate dearness allowance? How to calculate transport allowance?Your Feedback Matters! How was this Answer?
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What is house rent allowance?
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2022-03-07T08:49:19+00:00 2022-03-07T10:57:19+00:00Comment
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