WISH YOU A HAPPY AND A PROSPEROUS NEW YEAR.
Q.1. What is HRA?
HRA i.e. House Rent allowance is a common form of allowance employees receive. Taxation of HRA requires certain clarifications which generally people are looking for but do not get correct answers.
Q.2. What is the exemption available under Income tax act in relation to HRA?
A part of HRA is exempted u/s 10(13A) of Income Tax Act, 1961.
The amount of exemption is taken to be the least of following three amounts:
-
Amount of HRA received.
-
Excess of Rent paid over 10% of Salary
-
50% of Salary, in case the employee resides in metro cities. otherwise 40% of salary
Q.3. What is meant by Salary for the purpose of HRA?
Salary means Basic Salary + Dearness Allowance + Commission which is based on turnover acheived.
Q.4. If i stay in my own house and pay rent for some other house, is the rent paid considered for exemption?
The one and only important condition is that you should pay rent for the house in which you live. Such rent is only considered for exemption purpose. If you are staying in a house for which no rent is paid or payable, then HRA exemption is not available for you.
Q.5. I worked for 8 months, but I paid rent for 12 months. what is your view about HRA exemption?
If you worked for 8 months, the next question is for how many months, did you receive HRA? If you received HRA for 8 months, then those 8 months’ rent expenditure is only taken for calculation of exemption purpose. Other months – No.
Q.6. My employer is asking proof for Rent payment. What should i do as per law?
As per Rule 2A, an employee who is getting House Rent Allowance of Rs.3000/- p.m. or lesser need not submit any sort of rent receipt to their employer. However, IT department can ask for such proof, in case they want. Otherwise, employer cannot ask for the proof upto Rs.3000/-
Those having house rent allowance of more than Rs.3000/- p.m. should definitely submit rent receipts to their employer for the employer to estimate your tax liability correctly.
Q.7. I want to do HRA planning in my Salary Structure. i.e. I want to know, How much HRA should i receive from the company to best utilize the exemption? Please advice.
First tell me, what is your rental expenditure p.a. as a percentage of salary
a) Rent as a percentage of Salary: say x%
b) Reduce x by 10, so you have (x-10)%
c) Your HRA as a component in salary structure should be (x-10)% or 50% whichever is lower.
Q.8. I want to do HRA planning by finding out how much rent should I pay to get the maximum benefit? Please advice.
This means that your HRA is fixed but you want to know what amount of rent can get maximum benefit to you.
If your HRA is 50% of salary or more, then your rent can be 60% of salary.
If your HRA is less than 50% of salary, then your rent can be (HRA as a percentage of Salary + 10)%
Please note: This is Tax Planning not Tax avoidance. This is one of my researched tax planning option… so enjoy!
WISH YOU A HAPPY AND A PROSPEROUS NEW YEAR.
TAXE >> 
Hi,
could u plz send me the model House Rent recipt,so that i can climb it from my houseowner……
[Name of the Landlord]
[Address of the House]
“RENT RECEIPT”
Received with thanks from ____________, a sum of Rs.________ as mentioned below being the rent @ Rs.________ per month, for the period from ________ to ___________, in respect of residential portion occupied in the _________ floor of above premises.
[TAble to be put]
Rent for the month of : Date of Payment: Mode of Payment: Amount (Rs.)
Date: ____________
Place: ________
[Land Lord Signature]
Can u plz tell me, if i am co. & i want to give HRA to employees for claiming deduction then what will be the calcualation? Their is any rule for company if we are giving gross salary to them then what will be the bifurcation of Salary & HRA in percentage?
In structuring the salary of an employee, there is no hard and fast rule for fixing HRA component. Usually Basic Wages are taken to be 50% of the total package of salary and then there is dearness allowance – say 20% of the total pay package. Then you can get the HRA component by applying FAQ no.7 (Given above) Hope you get it!
alert(1)
Please let me know Can i submit Rent aggrement with my landlord as a proof to avail HRA exemption?
You can submit Rent Agreement BUT THAT ALONE IS NOT ENOUGH. You need to give the proof of payment of Rent, which means Rent Receipt is a must.
Hi,
After HRA exemption, balance of Rs.40,780 is left with for inclusion in taxable income. My doubt is , how tax is calculated on the balance either
1, 30 % of balance
2, included in taxable income & calulated as per tax slab
Provide your comments
How shall i get the house rent proof from lesser.is there any format?Pl send me that format and how to fill it up?
If i submit the rent proof shall i need any attestation (sign from government ghezated officer) against the proof?
Howmuch maximum can i detuct HRA from my salary.Iam in bangalore (peenya indl. estate)I am having consolidate pay of 15000 rupees.
Rent proof does not require any sort of attestation or sign from gazzetted officer or CA. Rent Proof should definitely have the sign of the landlord or landlady. That’s set.
For Mr. Mani Kumar: Max deductible amount from your consolidated pay of 15000 rupees.
Please tell me, What is your HRA component in the consolidated pay? or What is the rent you actually pay per month?
Then probably I can answer your question.
For Mr. Mohideen: Your question:
After HRA exemption, balance of Rs.40,780 is left with for inclusion in taxable income. My doubt is , how tax is calculated on the balance either
1, 30 % of balance
2, included in taxable income & calulated as per tax slab
Provide your comments
Answer:
After HRA exemption, the balance amount will be included in taxable income and calculated as per tax slab. Your second option is right.
For Mr. Mani:
your questioN:
How shall i get the house rent proof from lesser.is there any format?Pl send me that format and how to fill it up?
Answer:
The format is already there in this page. It’s easy to fill. Only basic info is required. Just go thru (Comment no. 2 on this post).
Hi Sanjay,
I have –
HRA = 70,512
40% of Salary = 94,013
Excess of rent paid over 10% of salary = 54,497
1. My landlord can not produce rent receipts due to some reasons. How much exemption can I get inthis condition?
2. To get the benifit of the above mentioned HRA amount(70,512), is it mandatory to produce rent receipts?
Please suggest.
Thanks,
Imran
Professional Tax:
You said
Salary means Basic Salary + Dearness Allowance + Commission which is based on turnover acheived.
Should we deduct the Profession tax from this, which is deducted at source. This tax is deducted from all salaries in some states like West Bengal, Andhra Pradesh and others.
NO. The Profession tax should not be deducted while calculating the salary for the purpose of computing HRA.
I am trying to upload the XML via e-filing website
https://incometaxindiaefiling.gov.in
but it always gives following error:
Errors during Upload of ITR Return
Invalid XML File. Form Section of ITR is incomplete, please correct and upload again.
Also how to digitally sign the return doc??
pls advise!!
sir my hra is 4500 where my basic is 9000 p/m
so tell me whether i have to pay tax for the hra
my annual income is 1.8Lakh, my question “is tax deduction is applicable for this income”.
I am staying in a joint family with my in-Laws. The house is in teh name of my father-in-law. Can I claim HRA in this situation.
If you are paying rent to your father-in-law, then you can claim HRA. If not then NO.
My employer has asked for a written evidence in order to claim HRA. I have paid house rent to my father-in -law. Where can I get such evidence from.
I have not declared monthly rent and not submitted rent receipts to my employer.
Can i produce rent receipts while i file for tax returns and get tax exemption?
Hi,
I’m setting up a new company and I’m curious as to how HRA is withheld from an employee’s salary and paid out.
Please advise.
Farrah
Sir i am not able to undersand HRA calculation “Excess of Rent paid over 10% of Salary” Kindly clearify the same
Sir i am not able to undersand HRA calculation “Excess of Rent paid over 10% of Salary” Kindly clearify the same
Sir
I am staying with my parents and receiving Rs. X as HRA.
My father owns the house and he has other taxable income.
Can I pay rent to my mother to claim HRA deduction, as she has no other taxable income.
i have made some investment under sec 80(c) i.e 1 lakh my question is this hra slab is different from 80(c) is’nt it, is there is any caping on exemption amount or not like 80(c) only allow 1 lakh
dear sir,
our director taking a salary of rs. 1,00,000/– each month, can he claim HRA Deduction & how much
Dear Medha M Deshpande,
Your director can definitely claim HRA provided he is paying rent for the house in which he stays.
Other clarifications are already available in the article above, but still repeated below for your query’s purpose:
Q. What is the exemption available under Income tax act in relation to HRA? A Part of HRA is exempted u/s 10(13A) of Income Tax Act, 1961. The amount of exemption is taken to be the least of following three amounts: 1. Amount of HRA received. 2. Excess of Rent paid over 10% of Salary 3. 50% of Salary, in case the employee resides in metro cities. otherwise 40% of salary
Q. What is meant by Salary for the purpose of HRA? Salary means Basic Salary + Dearness Allowance + Commission which is based on turnover acheived.
Regards Sanjay Kadel
Sir,
Please explain the HRA Deduction by taking 1 exampal
=============================
Example for HRA Calculation:
=============================
Mr. XYZ has his salary structure as below (per month):
Basic Salary: 30000
Dearness Allowance: 2000
Travelling Allowance: 800
House Rent Allowance: 5000
Other Allowances: 2200
Total Salary: 40000
Suppose Mr. XYZ lives in a rented house and pays Rs.6000 as Rent per month, Let’s see how much HRA exemption does he get.
(a) Salary for the purpose of HRA is Basic + DA. In this case it is: 30000 + 2000 = 32000
(b) Amount of exemption is least of the following:
(b.1) Actual Amount of HRA received: 5000
(b.2) Excess of Rent paid over 10% of Salary: 6000 – (10% of 32000) = 6000 – 3200 = 2800
(b.3) 50% of Salary: 50% of 32000 = 16000
(b.4) Least of the above all is Rs.2800, as arrived in (b.2)
Therefore, the HRA portion will be taxed in the following manner:
Actual amount of HRA received as per Salary Structure: 5000
Less: Amount exempted as calculated above: 2800
Taxable portion of HRA: 2200
Sir,
Basic Salary: 13650 p. m.
Dearness Allowance: 7149 p. m.
Travelling Allowance: 400 p. m.
House Rent Allowance: 2250 p. m.
Other Allowances: 2648 p. m.
Total Salary:26097
Sir please tell me how much will Taxable portion of HRA
Dear Mr. Amol S. Kamble,
You have not mentioned – How much is the Actual Rent paid p.m. ?? Without that we cannot calculate the exempted portion of HRA or taxable HRA!
Regards Sanjay Kadel
i am contractual employee in govt hospital. my consolidated salary is 30,000 + rent free accomodation.we have TDS @ 10.3%. my friend is living in a rented house and getting 26910+2691 (2691.00 as hra). i am living in accomodation provided by employer and getting 26910.00 for past 15 months. now the employer has deducted 10.30% of accomadation valued of 3,000.00 for 15 months in salary of february. and now i m getting 26601.00. plz advice that this deduction is right or not? who should pay the tax on accomodation provided by employer?
How can I deduct HRA from relatives of deceased forcefully occupied the quarter?
Hai,
Plz tell me how do i plan to save tax – related to HRA exemption
Basic : 164,500
HRA :82,250
I pay monthly rent about Rs.8000
& city i live in is not a metro
i have joined the job recently and relocated from a metro city to the other and their is a bulk amount deducted from my salary due to this. could u help me to sort out this.
hra during transfer of employee where the family of family is still occupying the earlier house .
I want to know the maximum deduction of HRA from salary
i am central govt employee…my basic salary =15340 ,DA=7823,HRA=4602, I AM PAYING RENT RS.6000/ PM STAYING IN METRO MUMBAI….KINDLY HELP ME IN CALULATING HRA DEDUCTION U/S 10