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If there is any change in the amount of salary, rent or HRA or city of residence from metro to non-metro or vice versa during the year then such deduction is calculated on monthly basis so we have made our hra calculator for yearly as well as monthly calculations.
House Rent Allowance (HRA) is an allowance paid by the employer to its employees for covering their house rent.
A deduction from such HRA is allowed under section 10(13A), which is least of the following: –
- HRA received
- 40% of salary (50% of the salary if the rented property is in Metro City i.e. Mumbai, Delhi, Chennai or Kolkata)
- Actual rent paid less 10% of salary
You can use this HRA calculator to calculate deduction allowed for HRA under section 10(13A) and Rule 2A of the Income Tax Act.
Meaning of salary for HRA exemption calculation
- Salary includes basic salary, dearness allowance (if it enters into retirement benefits) and fixed percentage commission on turnover achieved by the employee.
- Salary is taken on the due basis for HRA calculation.
- Salary is taken only for the period for which House Rent Allowance is received.
|Basic Salary + Dearness Allowance (Rs 1,00,000 * 12)|
|HRA (Rs 45,000 *12)|
|Rent of house in Delhi (Rs 30,000 * 12)|
|a) HRA received|
|b) 50% of the salary as the rented property is in metro city|
|c) Actual rent paid less 10% of salary (3,60,000 – 1,20,000)|
|HRA Exempt under section 10(13A) (least of the above)|
Form 12BB is required to be filed with the employer if you want your employer to take this deduction into consideration and deduct a lower amount of TDS. The amount of rent payable and the details of the landlord along with the PAN is to be written in form 12BB.