HRA Calculator

Calculate your HRA exemption.

Salary (Basic p.a)

₹10,000
₹25,00,000

Dearness allowance(p.a)

₹10,000
₹25,00,000

HRA received(p.a)

₹10,000
₹25,00,000

Total rent paid(p.a)

₹10,000
₹25,00,000

Working In Metro City?

What is HRA?

The salary generally constitutes basic pay, allowances for travel, accommodation & health as well as a forced saving in the form of gratuity or PF. House Rent Allowance (HRA) is that part of the salary that is provided by the employer for the expense towards accommodation rentals. It reduces the tax amount owed to the Government of India, as per Section 10 (13A) with Rule 2A of the Income Tax Act, 1961. It can be claimed only in the event that the employee or taxpayer lives in a rented accommodation.

How is HRA calculated?

Every public and private sector employee’s salary is broken down and detailed into various allowance, forced savings and the basic salary. The HRA is a part of this structure. Whether the employer has provided a separate amount for HRA or not, the HRA exemption can be calculated, so one can apply for the exemption during filing of ITR. To calculate HRA, as per the Income Tax Act, it is the lowest amount of all the following.

1. The amount of HRA mentioned in the salary break up
2. 50% of the salary, if the employee is based in an Indian metro city
3. 40% of the salary, if the employee is based in an Indian non-metro city
4. Actual rent – 10% of salary (basic salary + commissions + dearness allowance)

What is the HRA calculation formula?

HRA calculation can be done by simply using the Upstox HRA calculator for Income Tax. The HRA Exemption is calculated to be the lowest of the following four values:

1. The amount of HRA mentioned in the salary break up
2. 50% of the salary, if the employee is based in an Indian metro city
3. 40% of the salary, if the employee is based in an Indian non-metro city
4. Actual rent – 10% of salary (basic salary + commissions + dearness allowance)

Let’s say the Basic Salary of an employee is Rs. 5,00,000 p.a. & HRA provided by employer is Rs. 1,50,000. He pays rent of Rs. 2,50,000. Also let us assume that the employee is working out of New Delhi.

1. HRA is Rs. 1,50,000
2. 50% of Salary is Rs. 2,50,000
3. Actual rent (2,50,000) – 10% of salary (50,000) is Rs. 2,00,000

Hence, in the above mentioned scenario, the HRA Exemption, being the lowest of the three amounts is Rs. 1,50,000.

How to Claim HRA Benefit?

During filing Income Tax Returns, HRA Exemption can be claimed by providing yours and landlord’s PAN card copy, rent payment receipts and rental agreement/s. These documents must be submitted & the employee may deduct from his Income Tax the lowest of the following amounts, as per the Income Tax Act, 1961. HRA Exemption is the lowest value amongst:

1. The amount of HRA mentioned in the salary break up
2. 50% of the salary, if the employee is based in an Indian metro city
3. 40% of the salary, if the employee is based in an Indian non-metro city
4. Actual rent – 10% of salary (basic salary + commissions + dearness allowance)

What is HRA Exemption?

HRA Exemption is a tax benefit that can be claimed by any employee of both the private & public sector as long as they live in a rented property where they pay rent to the homeowner. Every employee is eligible to benefit from HRA Exemption as per their salary breakup. The lowest amount between your Housing Rental Allowance provided by the employer, 10% less than your basic salary, 50% for metro city dwellers and 40% for non-metro dwellers is the HRA exemption you can claim during filing of your ITR. You can claim this even if your employer does not provide HRA. In the case both you and your spouse or other family members share rental accommodation, either all parties must have separate rent payment receipts or only one person can claim HRA.

Documents Required to Claim the HRA Exemption?

The documents required for claiming HRA Exemption are:

1. If your rent increases over Rs. 1,00,000 in one financial year, you will have to provide both yours and your landlord’s PAN card copy.
2. The rental receipts which should have the date, landlord’s name, your name, landlord’s PAN details, rented accommodation address, duration of stay & a revenue stamp and signature of the landlord. For a year, atleast 4 receipts are required as the same one can be used for 3 months.
3. Rental agreement.

What are the conditions for claiming HRA Exemption?

The conditions for claiming HRA Exemption are:

1. As per Section 80, the exemption can only be claimed when you have a rental agreement and are paying rent to a house owner.
2. In the periods that rent is not paid, the HRA is not deductible.
3. If you change jobs, the HRA is calculated monthly. The same is true if you move from a metro city to a non-metro city or vice versa.
4. Rent paid to any member of the family other than your father can be claimed under HRA. But, to claim this HRA, there must be regular monthly payments of the rent through bank transfers.

What are the eligibility factors to avail HRA Exemptions?

To be eligible to avail HRA Exemption, you must be:

1. An employee in the private or public sector
2. Live in a rented accommodation close to your place of work
3. Paying rent to a house owner, with proof of an agreement & receipts.

What are the benefits of the HRA Exemption calculator with Upstox?

The Upstox HRA Exemption calculator is an easy to use calculator that provides accurate answers instantaneously and cancels out human error. To quickly calculate your Housing Rental Allowance Exemption for Income Tax benefits, use this calculator. It is easy to understand and takes into account all parameters of HRA calculation, hence, providing the quickest accurate result.

HRA calculation examples:

Let’s say the Basic Salary of an employee is Rs. 7,00,000 p.a. & HRA provided by employer is Rs. 4,50,000. He pays rent of Rs. 3,50,000. Also let us assume that the employee is working out of Mumbai.

1. HRA is Rs. 4,50,000
2. 50% of Salary is Rs. 3,50,000
3. Actual rent (3,50,000) – 10% of salary (70,000) is Rs. 2,80,000

Hence, in the above mentioned scenario, the HRA Exemption, being the lowest of the three amounts is Rs. 2,80,000.

In the same example, what if the employee was living in the small town of Shimla?

4. HRA is Rs. 4,50,000
5. 40% of Salary is Rs. 3,15,000
6. Actual rent (3,50,000) – 10% of salary (70,000) is Rs. 2,80,000

Hence, in the above mentioned scenario, the HRA Exemption, being the lowest of the three amounts is Rs. 2,80,000.

Frequently Asked Questions

How is exemption on HRA calculated?

Every public and private sector employee’s salary is broken down and detailed into various allowance, forced savings and the basic salary. The HRA is a part of this structure. Whether the employer has provided a separate amount for HRA or not, the HRA exemption can be calculated, so one can apply for the exemption during filing of ITR. To calculate HRA, as per the Income Tax Act, it is the lowest amount of all the following.

1. The amount of HRA mentioned in the salary break up
2. 50% of the salary, if the employee is based in an Indian metro city
3. 40% of the salary, if the employee is based in an Indian non-metro city
4. Actual rent – 10% of salary (basic salary + commissions + dearness allowance)

What percent of salary is HRA?

The HRA must be 10% less than your basic salary. If you live in a metro city, the HRA is calculated at 50% of your basic salary or if you live in a non-metro city, it is calculated at 40% of your basic salary.

Is HRA included in basic salary?

No, HRA is a part of the gross salary, which includes basic salary, allowances for travel, rent and health as well as commissions, dearness allowance and forced savings like PF and gratuity.

How much HRA is allowed?

The HRA must be 10% less than your basic salary. If you live in a metro city, the HRA allowed is 50% of your basic salary or if you live in a non-metro city, it is 40% of your basic salary.

Can I get income tax benefit on HRA?

Yes, once you make the HRA exemption calculation for Income tax, you can claim the exemption while filing your ITR. It is the lowest amount amongst:

1. The amount of HRA mentioned in the salary break up
2. 50% of the salary, if the employee is based in an Indian metro city
3. 40% of the salary, if the employee is based in an Indian non-metro city
4. Actual rent – 10% of salary (basic salary + commissions + dearness allowance)

Can I get both HRA tax exemption and tax rebate on my home loan?

Yes, you can claim HRA exemption and tax rebate on any home loan you may have. The deductions you can file in ITR would include:

1. HRA tax exemption
2. Tax rebate on home loan
3. Tax deduction on Home Loan Principal payment

Can HRA exemption be claimed in ITR?

Yes, once you make the HRA exemption calculation for Income tax, you can claim the exemption while filing your ITR. It is the lowest amount amongst:

1. The amount of HRA mentioned in the salary break up
2. 50% of the salary, if the employee is based in an Indian metro city
3. 40% of the salary, if the employee is based in an Indian non-metro city
4. Actual rent – 10% of salary (basic salary + commissions + dearness allowance)

Can I claim HRA for rent paid on behalf of parents?

No, HRA cannot be claimed if the parents live separately in a house rented in either of their names. The parents rent can be claimed as long as they are staying in a house rented by the owner to you, in your name.

In the case the parents own the house and the employee is staying with them, he can get a rental contract made with them and pay them rent, which can then be claimed under HRA exemption.

What are the rules for HRA exemption?

The rules for claiming HRA Exemption are:

1. As per Section 80, the exemption can only be claimed when you have a rental agreement and are paying rent to a house owner.
2. In the periods that rent is not paid, the HRA is not deductible.
3. If you change jobs, the HRA is calculated monthly. The same is true if you move from a metro city to a non-metro city or vice versa.
4. Rent paid to any member of the family other than your father can be claimed under HRA. But, to claim this HRA, there must be regular monthly payments of the rent through bank transfers.

Can HRA exemption be claimed for two houses?

No, HRA can only be claimed for the rental accommodation that the employee lives in currently and no other place.

Disclaimer:
This calculator is meant to be used for indicative purposes only. It is designed to assist you in determining the appropriate amount of prospective investments. This calculator alone is not sufficient and shouldn’t be used for the development or implementation of any investment strategy. Upstox does not take the responsibility/liability nor does it undertake the authenticity of the figures calculated therein. Upstox makes no warranty about the accuracy of the calculators/reckoners. The examples do not claim to represent the performance of any security or investments. In view of the individual nature of tax consequences, each investor is advised to consult his/her own professional tax advisor before making any investment decisions on the basis of the results provided through the use of this calculator.

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