Author Topic: House Rent Allowance Taxability & Calculation : HRA  (Read 14571 times)

LUBANA

  • Real Savvy
  • *****
  • Offline
  • Posts: 5122
  • Gender: Male
  • LUBANA
    • AOL Instant Messenger - -
    • Yahoo Instant Messenger - -
    • View Profile
House Rent Allowance Taxability & Calculation : HRA
« on: January 18, 2012, 07:50:18 PM »
Understanding how HRA works!
By BankBazaar.com | Strategic Moves ''  '  " 7 hours ago









The end of another financial year is drawing close and is a couple of months away. The words "income tax" start ringing a frantic bell towards the end of every financial year, and many questions arise. Please do note that it is best to be prepared in the beginning rather than the end of a financial year!

There are many tax components you need to be clear about and also figure out how to plan your investments to gain maximum returns as well as maximum tax benefits. One such tax component is the tax benefit you can claim from your house rent allowance. This article helps you understand how this works!

HRA (house rent allowance) is provided to salaried people under Section 10 (13A) of Income Tax Act, 1961, in accordance with rule 2A of Income Tax Rules. Self employed professionals are eligible for tax deductions under section 80GG of Income Tax Act, 1961.

Dependent factors

When you are calculating HRA for tax exemption you take into consideration four aspects which includes salary, HRA received, the actual rent paid and where you reside, i.e. if it is a metro or non-metro. If these aspects remain constant through the year, then tax exemption is calculated as a whole annually, if this is subject to change, as in a rent hike or shift in residence etc. then it is calculated on a monthly basis.

The place of residence is significant in HRA calculation as for a metro the tax exemption for HRA is 50% of the basic salary while for non-metros it is 40% of the basic salary.

On paying rent

It is not essential that you should pay rent only to a landlord to avail your HRA benefits. You can pay rent to your parents to claim tax benefits. However, they need to account for the same under `Income from house/property' and will be entitled to pay tax for the same.

Remember you cannot try the same with your spouse, as it is not permissible under income tax law, as you are expected to reside together for all practical purposes.

You need to submit proof of rent paid through rent receipts, for which only two need to be submitted, one for the beginning of the year and one towards the end of the financial year. It should have a one rupee revenue stamp affixed with the signature of the person who has received the rent,  along with other details such as the rented residence address, rent paid, name of the person who rents it etc.

How is HRA calculated

To figure out how much HRA exemption you are eligible for, consider these three values which includes a. The actual rent allowance the employer provides you as part of your salary, b. the actual rent you pay for your house from which 10% of your basic pay is deducted, c. 50% of your basic salary when you reside in a metro or 40% if you reside in a non-metro.

The least value of these three values is allowed as tax exemption on your HRA. You can discuss restructuring your pay structure with your employer in order to avail the most of your HRA tax benefit.

Here is a sample illustration for your understanding:

Sheetal earns a basic salary of Rs. 40,000 per month and rents an apartment in Delhi for Rs. 20,000 per month (hence eligible for a 50% of the basic pay for HRA exemption). The actual HRA she receives is Rs. 25,000.

These values are considered to find out her HRA tax exemption:

a. Actual HRA received, i.e. Rs. 25,000,

b. 50% of the basic salary, i.e. Rs. 20,000, and

c. Excess of rent paid over 10% of salary, i.e. Rs. 20,000 ''  '   Ra 4,000 = Rs. 16,000

The value considered for her actual HRA exemption will be the least value of the above figures. Hence, the net taxable HRA for Sheetal will be Rs. 25,000 ''  '   16,000 (available HRA deduction) = Rs. 9,000.

Availing tax benefits on your home loan and HRA

As long as you are paying rent for an accommodation, you can claim tax benefits on the HRA component of your salary, while also availing tax benefits on your home loan. This could be the case if your own home is rented out or you work from another city etc. However, you need to account for any rental income you receive from the property you own.

By BankBazaar.com - an online marketplace for your personal loan and home loan needs.




Pagination

Previous   
« Last Edit: January 18, 2012, 07:55:07 PM by <--Jack--> »

RAJ

  • Guest
Re: House Rent Allowance Taxability & Calculation : HRA
« Reply #1 on: February 18, 2012, 10:30:38 AM »
« Last Edit: February 18, 2012, 10:32:47 AM by RAJ »

kasifptc

  • Guest
Re: House Rent Allowance Taxability & Calculation : HRA
« Reply #2 on: February 18, 2012, 03:57:33 PM »
sir, plz sand me your e-mail addr.to
kasiffarooqi15@gmail.com

Manjit

  • Guest
Re: House Rent Allowance Taxability & Calculation : HRA
« Reply #3 on: February 22, 2012, 03:34:21 AM »
Dear Sir ! If the assessing officer is made free to make an inquiry in this regard, don't you think that it will create unnecessary problems for the employees who have not good terms with D.D.O's
« Last Edit: February 22, 2012, 03:38:09 AM by Manjit »

j.k

  • Real Member
  • **
  • Offline
  • Posts: 218
    • View Profile
    • Email
Re: House Rent Allowance Taxability & Calculation : HRA
« Reply #4 on: February 29, 2012, 03:56:21 PM »
How much Hra we can deduct from gross salary if my total basic pay is 17181/-.And also i received 17181 as total HRA .I am residing in municipal council. And i paid 42000 as rent.

AVTAR PATWAR

  • Unionist
  • *****
  • Offline
  • Posts: 143
    • View Profile
    • Email
Re: House Rent Allowance Taxability & Calculation : HRA
« Reply #5 on: February 29, 2012, 04:36:13 PM »
http://gmsdarauli.webs.com/apps/documents/

download tax calculation software fill ur salary and hra details and get all calculated automatically....

supernatural

  • Real Member
  • **
  • Offline
  • Posts: 157
    • View Profile
Re: House Rent Allowance Taxability & Calculation : HRA
« Reply #6 on: February 29, 2012, 09:47:10 PM »
nice  work sir ,  tuhadi school di website bahut wadiya hai ji , WELL DONE JI , Keep it up sir ji

Dhillon J D Dhuhar

  • Guest
Re: House Rent Allowance Taxability & Calculation : HRA
« Reply #7 on: March 04, 2012, 10:04:22 AM »
how h r a calculated basic da10percent ja basic +dA da 10 percent i mean actual pay-10per of bp or basic+da

CHARNJIT SINGH

  • Guest
Re: House Rent Allowance Taxability & Calculation : HRA
« Reply #8 on: March 04, 2012, 10:08:49 AM »
Kewal basic pay da 10%

DEEPAK

  • Unionist
  • *****
  • Offline
  • Posts: 632
  • Gender: Male
    • View Profile
    • Email
Re: House Rent Allowance Taxability & Calculation : HRA
« Reply #9 on: March 04, 2012, 12:44:54 PM »
DA is the part of salary. 10% of (Basic + D.A)

 

GoogleTagged



Medical Allowance vdhaun baare vichar-vtandhra.

Started by vineysharma

Replies: 10
Views: 2386
Last post October 17, 2012, 07:39:36 PM
by vineysharma
CLARIFICATION REGARDING CONVEYANCE ALLOWANCE TO HANDICAPPED EMPLOYEES NO. 3/9/20

Started by RAJ

Replies: 4
Views: 3133
Last post July 17, 2012, 08:38:12 PM
by Prince12012
News related to MOBILE ALLOWANCE

Started by Bhagwantgtu

Replies: 212
Views: 49987
Last post July 02, 2015, 06:17:25 AM
by Hannibal
Children education allowance clarification

Started by RAJ

Replies: 2
Views: 1075
Last post February 22, 2012, 06:10:45 PM
by RAJ
Boarder House Rent : BHR

Started by Vikram1234

Replies: 8
Views: 2188
Last post February 04, 2012, 12:27:23 PM
by aaarvind