Take the pledge to vote

For a better tommorow#AajSawaroApnaKal
  • I agree to receive emails from News18

  • I promise to vote in this year's elections no matter what the odds are.
  • Please check above checkbox.

    SUBMIT

Thank you for
taking the pledge

Vote responsibly as each vote counts
and makes a diffrence

Disclaimer:

Issued in public interest by HDFC Life. HDFC Life Insurance Company Limited (Formerly HDFC Standard Life Insurance Company Limited) (“HDFC Life”). CIN: L65110MH2000PLC128245, IRDAI Reg. No. 101 . The name/letters "HDFC" in the name/logo of the company belongs to Housing Development Finance Corporation Limited ("HDFC Limited") and is used by HDFC Life under an agreement entered into with HDFC Limited. ARN EU/04/19/13618
LIVE TV DownloadNews18 App
News18 English
News18 » Business
1-min read

What is HRA? How to Calculate House Rent Allowance

HRA is a part of the salary provided by an employer to his employee for his rented accommodation. HRA exemption can be claimed only if the employee is residing in a rented house.

News18 Specials

Updated:July 3, 2017, 6:19 PM IST
facebookTwitterskypewhatsapp
What is HRA? How to Calculate House Rent Allowance
Representative image.
Loading...

House Rent Allowance or HRA is a part of the salary provided by an employer to his employee for his rented accommodation. HRA exemption can be claimed only if the employee is residing in a rented house. It comes under Section 10 and the exemption from tax can be claimed partially or fully. HRA is a useful allocation of your salary component to save tax.

The calculation of HRA depends on mainly four factors viz:

- Gross Salary

- HRA Percentage of Salary

- House Rent

- City of Rented accommodation

How HRA is Calculated?

Mentioned below are the 3 provisions based on which the actual HRA is calculated. The lowest amongst these 3 HRA calculations is considered for deduction.

- The HRA amount received from the employer

- Actual amount paid for rent minus 10% of basic salary

- 50% HRA if the employee is staying in a metro city and 40% HRA for non-metro cities

Let’s take an Example:

- Let Tina’s salary be Rs 50,000 per month (basic pay).

- HRA provided by employer is Rs 20,000.

- 10% of annual basic salary is Rs 60,000.

Tina stays in New Delhi (Metro City) in a small accommodation and pays Rs 15,000 rent per month.

Let’s calculate HRA under its 3 provisions:

- Amount received as HRA from the employer = Rs.20,000 × 12 = Rs 2,40,000

- Rent paid minus 10% of basic = Rs (15,000×12) - 60000 = Rs.1,20,000

- 50% of basic salary = Rs.3,00,000

So the HRA amount that will be exempted from income tax will be the lowest#2 i.e. Rs.1,20,000.

Get the best of News18 delivered to your inbox - subscribe to News18 Daybreak. Follow News18.com on Twitter, Instagram, Facebook, Telegram, TikTok and on YouTube, and stay in the know with what's happening in the world around you – in real time.

| Edited by: Aakarshuk Sarna
Read full article
Loading...
Next Story
Next Story

Also Watch

facebookTwitterskypewhatsapp
Most Active
Company Price Change %Gain
HDFC 2,049.30 3.78
Maruti Suzuki 6,591.95 10.39
ICICI Bank 417.50 7.99
HDFC Bank 1,199.60 8.95
Reliance 1,254.35 6.39
Company Price Change %Gain
Astral Poly Tec 1,213.70 5.25
HDFC 2,052.10 3.92
SBI Life Insura 815.85 1.73
Zee Entertain 301.10 -2.49
Maruti Suzuki 6,585.25 10.89
Top Gainers
Company Price Change %Gain
Eicher Motors 17,860.20 13.38
Hero Motocorp 2,862.90 13.06
IndusInd Bank 1,419.60 10.71
UltraTechCement 4,269.65 10.43
Maruti Suzuki 6,591.95 10.39
Company Price Change %Gain
Hero Motocorp 2,866.50 13.19
Maruti Suzuki 6,585.25 10.89
IndusInd Bank 1,419.60 10.74
Bajaj Finance 3,705.60 10.19
SBI 301.70 10.09
Top Losers
Company Price Change %Gain
Power Grid Corp 196.20 -2.46
Zee Entertain 301.40 -2.41
Infosys 805.00 -1.91
TCS 2,065.45 -1.74
NTPC 119.85 -1.52
Company Price Change %Gain
Power Grid Corp 196.35 -2.39
Infosys 805.10 -1.94
TCS 2,065.60 -1.74
NTPC 119.90 -1.52

Live TV

Countdown To Elections Results
To Assembly Elections 2018 Results