What is HRA ?
- Income tax act provides deduction of HRA under section 10(13 A)
- HRA is an exemption, ie. the part of your salary which is nontaxable provided you fulfill all conditions.
- HRA lets you reduce your taxable income, which in essence would mean less taxes to pay
- Simultaneous deduction of HRA, home loan interest (Section 24b) and housing loan repayment (Section 80C) is permitted.
- An employee can claim HRA benefits even if he owns a house/property, and lives in a rented property.
How to calculate HRA
If you are staying in a rented house and receive HRA from your employer then you can avail this exemption. However to avail this exemption you actually need to be paying rent for the house. So if you are staying in your own house and are not renting it; then the HRA you receive is not exempted and is subject to tax.
For instance if you are staying in Delhi (metro); your basic salary is 10,000/-; and you are paying rent of 5000/- per month.The House Rent Allowance is 5000 per month.The exemption you receive will be the minimum of the following three options:
|Rules||Eligibility amount (in rupees)|
|Actual house rent allowance received from your employer in 12 months||60,000 (12*5,000)|
|Actual house rent paid by you minus 10% of your basic salary||48,000 (60,000 – 12,000 [10% of 1,20,000])|
|50% of your basic salary if you live in a metro or 40% of your basic salary if you live in a non metro||60,000 (50% of 10,000*12)|
In this case you will get exemption on 48,000/- per year on HRA; even though the HRA you are receiving is 60,000. If your rent was higher; say
Frequently asked questions
Unlike traditional products, Unit Linked insurance products are subject to market risk, which affect the Net Asset Values & the customer shall be responsible for his/her decision. The names of the Company, Product names or fund options do not indicate their quality or future guidance on returns. Funds do not offer guaranteed or assured returns.
Tax deductions are subject to conditions of section 10(13A), 24(b), 80C, 80GG and other provisions of The Income Tax Act, 1961. Tax laws are subject to amendments from time to time. Please consult your tax advisor for details.
Advt No - W/II/1263/2016-17