You can find your working city house rent allowance in the HRA calculator provided, Enter your basic pay and select your working-class city type, then your applicable HRA will be available as per your PRC…
House Rental Allowance is a component of salary which is a part of their net amount besides their Basic salary, and this is provided to someone who is staying in rented accommodation, and the amount of House Rental Allowance is calculated from basic salary and based on the new Tax regime there is a particular percentage which will be used to get the amount.
Every employee who is working in various companies does have these components in salary that increase their Net worth and as well give full support in filing the IT returns, and it is important to know about the HRA and its various options that will help you in growing.
The tax exemption shown in HRA calculator is given on the part of HRA that is given by the employer and it will only be fixed, even if the employer has paid extra for their house rent.
The HRA will differ based on employee location and their category which will be decided by the employer, and there are certain criteria based on which the house rent allowance will be calculated, the least amount the set value will be utilized during the tax exemption.
In recent cases, few corporate companies have removed the HRA from their list of components in salary and they have added it to the dearness allowance, and thus exemption in such cases will not be possible and it will only be possible if your salary slip has got a component listed as HRA with the calculated value in HRA calculator.
Tax Benefit of House Rental Allowance
HRA is a component of salary and employee can have HRA exemption is available in Tax and if the employee is paying rent then he is eligible to get tax benefits under HRA in the IT filling, and these are below conditions on which one can apply for Tax benefits and get some exemption during IT filling that will help them to get secure form IT slab cut off.
- Rent must be lower than 10 percent of basic salary
- Amount of HRA set by the employer
- 50% and 40% for metro and non-metro cities
What is House Rental Allowance
HRA is decided from the salary and there are some basic components that will be used to decide the HRA.
- Actual component of HRA in Salary
- HRA is 50% of basic salary if a residence in metro cities or 40% if a residence of non-metro cities
- The rent paid to be less than 10% of basic salary
HRA Exemption Example
Let us take an example of an employee staying in the metro city with a basic salary of 50,000, and HRA at 50% Rs.25000 then the calculation of his HRA will be followed as shown by 99employee.com in the below contest, and in the same process shown in HRA calculator, if he has taken an accommodation for which he is paying a rent of 15,000.
- The actual HRA from Employer received is Rs 25000*12 = Rs.3,00,000
- 50 % of Basic Salary for Metro city is applicable= 50% *(50000*12) = 300000
- Rent Paid = 15000*12 – 10% of Salary (50000*12) = 18000-60000 = 120000
- Considering the least of these values Rs. 120000 will be eligible to get an HRA exemption of 1,00,000.
Can I Claim HRA by Paying Rent of a Parents House?
In case you’re staying with your parents and you’re paying the rent for the same house, and then you can get the HRA exemption for that house by showing the details, and the same be included in the agreement that is being attached for Income Tax claim.
In the present day, there is a major percent of employees who stay with their parents and the whole house will be rented in their parents or guardian’s name, and any such condition can be used to claim as an House Rental Allowance and does get benefits from income tax returns.
Is PAN mandatory to file HRA?
Yes, during filling the House Rental allowance the PAN of the owner is must be submitted, and only once the PAN is uploaded, the document such as the rental agreement or the rent receipt will be sent for verification, and these combinations of receipt, agreement, and owners PAN will make the HRA exempted in Income Tax Returns.
Without a PAN number the IT filling for HRA will not be accepted and even if you apply the amount will not be approved.
Can I change the HRA value in Salary?
The human resource portal of the employee will have an option to change the HRA value in these salaries, and the value must be calculated based on the formulae, and the remaining if given excess by the employer will be added as extra allowance in their salary slip.
The total amount will be the same in salary, but the allowance will differ as per your IT filing requirements, and in any case, the HRA must be in values that are defined and does agree with the condition of the salary structure which will not make changes in these basic component values.