HRA Calculator: Use the HRA Calculator to figure out how much of your House Rent Allowance is exempt from taxes and how much is taxable.
How to Use HRA Calculator ?
Follow the below Steps to Calculate HRA:
Step 1: First you need to select Metro or Non Metro city.
Step 2: Enter the amount against Basic Salary (Per Annum)
Step 3: Enter the amount against HRA Received (Per Annum)
Step 4: Enter the amount against Rent Paid (Per Annum)
What is House Rent Allowance ?
House Rent Allowance (HRA) is an allowance provided by employers to employees as a part of their salary to meet the cost of renting a home. It is a component of the salary package and is given to meet the expenses incurred towards rented accommodation. HRA can be partially or fully exempt from income tax, subject to certain conditions and the amount of rent paid. It is designed to provide employees with financial relief for housing-related expenses.
How House Rent Allowance is Calculated ?
HRA is calculated using the following factors:
- Actual HRA received from the employer
- Actual rent paid for the accommodation
- Salary of the individual
- City of residence (metro or non-metro)
The minimum of these three conditions is used to calculate the exempt HRA. The formula for HRA calculation is:
HRA Exemption = Lowest of (Actual HRA Received, 50% of Salary for metro cities, 40% for non-metro cities, Actual Rent paid – 10% of Salary)
What is Metro City in House Rent Allowance ?
The term “Metro city” refers to major urban areas with a high population density and significant economic and cultural importance. In the context of House Rent Allowance (HRA), metro cities typically include prominent cities such as Mumbai (Bombay), Delhi, Bangalore, Kolkata, Chennai, Hyderabad, Ahmedabad, Pune, Surat, and Jaipur. These cities are characterized by their large population, high levels of infrastructure development, and prominence in national and international economic activities.
- Mumbai (Bombay)
- Delhi
- Bangalore
- Kolkata
- Chennai
- Hyderabad
- Ahmedabad
- Pune
- Surat
- Jaipur
What is Non-Metro City in House Rent Allowance ?
Non-metro cities, in the context of House Rent Allowance (HRA), refer to urban areas that are not classified as major metropolitan hubs. These cities typically have a lower population density and less prominent economic and cultural significance compared to metro cities. Non-metro cities can include locations such as Agra, Bhopal, Chandigarh, Goa, Indore, Lucknow, Nagpur, Patna, and Varanasi among others. While they may not have the same level of infrastructure development and national/international economic activities as metro cities, they are still important urban centers within their respective regions.
- Agra
- Bhopal
- Chandigarh
- Goa
- Indore
- Lucknow
- Nagpur
- Patna
- Varanasi
Watch Video to Calculate House Rent Allowance
House Rent Allowance FAQ’s
Q. Can I claim House Rent Allowance if I live with my parents and pay them rent?
Ans: Yes, you can claim HRA if you are living with your parents and paying them rent, provided they own the house and the rental arrangement is genuine.
Q. What documents are required to claim House Rent Allowance?
Ans: To claim House Rent Allowance, you typically need to provide rent receipts, a copy of the rent agreement, and other supporting documents as required by your employer or the tax authorities.
Q. Can I claim House Rent Allowance if I am repaying a home loan?
Ans: House Rent Allowance can be claimed if you are repaying a home loan, provided you are not living in the house for which you are repaying the loan. However, you cannot claim both HRA and tax benefits on the home loan for the same property.
Q. Is HRA applicable for self-employed individuals?
Ans: No, House Rent Allowance is a benefit provided by employers to their employees and is not applicable for self-employed individuals.
Q. Do I need to submit proof of rent to my employer to claim HRA?
Ans: Yes, you generally need to submit proof of rent in the form of rent receipts or rent agreement to your employer in order to claim House Rent Allowance.
Q. What happens if I don’t submit proof of rent to my employer for HRA?
Ans: If you do not submit the required proof of rent to your employer, they may not consider House Rent Allowance exemption while calculating your tax liability, which could result in a higher tax deduction. Always ensure to provide the necessary documentation to claim House Rent Allowance effectively.
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Disclaimer: The views expressed are solely those of the author and Edutaxtuber. The content in this piece is solely intended for informational purposes and for personal, non-commercial use. It should not be considered as professional advice or an endorsement by any organization. The author, the organization, and its affiliates disclaim any liability for any loss or harm resulting from the information in this article, as well as for any decisions made based on it.
Disclaimer:
The content provided is for educational purposes only and should not be considered as financial, legal, or tax advice. It is recommended to consult with a qualified professional or refer to official government resources for accurate and personalized information related to House Rent Allowance (HRA), income tax, and related matters.