Mutual Funds
Insurance
Calculators
Great! You have sucessfully subscribed for newsletters for investments
Subscribed email:
A working individual's salary generally comprises multiple components such as basic pay, allowances for different purposes such as accommodation, travel and health, and forced savings options like gratuity and provident fund. Understanding salary structure is essential not just for financial reasons but also to help with filing taxes. One such component of salary is house rent allowance, usually abbreviated as HRA. This calculator allows you to know how much of your HRA is taxable and how much is exempted from tax.
| HRA taxable | Tax @30% | HRA exempted |
|---|---|---|
| ₹36,000 | ₹10,800 | ₹60,000/year |
Save upto ₹78,000 in taxes with ET Money
Apart from exemptions like HRA, you can use various deductions to bring down your taxable income. These deductions can be availed on a host of expenses, investments, and savings under different sections of the Income Tax Act, 1961.
There are many portals and services online that will calculate the amount of your HRA tax exemption for you. Online HRA calculators in India are quick and easy ways to compute this tax deduction component. HRA calculators online will ask you to input your salary details and compute your HRA for you. This way, you can avoid mistakes in the HRA formula.
ET Money's HRA calculator in India is an effective and painless way to calculate your HRA exemption without errors.
ET Money's HRA calculator is the simplest way to compute your HRA exemption. In 3 easy steps, you can know how much HRA you can claim as exemption and accurately calculate Income Tax that you need to pay.
HRA calculations are based on several factors, as mentioned above. However, the amount of HRA tax exemption that you can claim is the lowest of the following three provisions:
In point 3, salary means basic salary plus dearness allowance and any commissions you may be paid. No other allowances are taken into consideration for HRA deduction.
The way to compute the HRA formula is to calculate the above three and then claim the lowest amount as HRA deduction.
To understand the HRA calculation formula better, let us consider an example. Ms. Ishika Gupta works for an MNC in Kolkata. She lives in a rented house, paying ₹10,000 per month. Her salary structure looks like this:
| Component | Amount (INR/ ₹) |
|---|---|
| Basic Pay | 30,000 |
| HRA | 13,000 |
| Allowances | 7,900 |
| Provident fund | 3,600 |
| Total Salary | 54,500 |
When Ms. Gupta applies the HRA formula, she gets:
The lowest of the three is ₹84,000, which she can claim as an HRA tax exemption. In order to avoid confusion, you can use HRA calculators online to ascertain your HRA deduction.
There may be some special cases in HRA calculation. For instance, you may own your own house in a different city from the one you are working in. Or, you may be paying rent to your parents. Here is how HRA exemption may be calculated for these:
If you own a house in a different city from the one you're living and working in, you are still eligible to claim HRA. If you pay the home loan EMIs for your own house, you can claim a tax deduction for that too. HRA exemption rules are applicable under Section 10 (13A). You will simply need to produce an appropriate proof for both.
You can claim an HRA deduction for rent paid even to family members. This means that in case you live with your parents, you can still claim HRA exemption if you are able to provide proof of rental transactions.
As long as there is a rental agreement, financial transaction proof, rent receipts, etc., paid to your parents, the same HRA exemption rules will apply. However, you cannot claim this benefit if you own the property. You can also not claim HRA exemption on a property owned by your spouse.
One thing to note with HRA is that it up to the employer to provide this benefit. This means that some employers may not provide an HRA component as part of the salary. If your employer does not pay HRA, but you still pay rent, you can claim the benefit under Section 80GG of the Income Tax Act. You will need to file Form 10BA.
To claim income tax HRA exemption, you will need to provide the following documents as proof
Rent receipts with the following details: Date, Landlord's name, Tenant's name, PAN details of the landlord, Address of rental accommodation, Stay duration and rent receipt affixed with Revenue Stamp cross-signed by the landlord.
The HR department at your office may require you to furnish these. Alternatively, if you are claiming HRA exemption under Section 80GG of the Income Tax Act, you may be required to show these proofs to the tax department.
PAN Details: If the rent paid exceeds ₹1,00,000 annually, you will need to provide PAN details and a copy of the PAN of the landlord. In case the landlord does not have a PAN card, they will need to give you a self-attested declaration form to the same effect.
Rental Agreement Details: A photocopy of the rental agreement may also be needed.
In case you are paying rent to your family members, like parents, you will have to furnish the same proofs. You may also have to prove the financial transactions through copies of bank statements.
