Guide on HRA, HRA Calculation and HRA Exemption

As per the name suggests House Rent Allowance often known as HRA is a payment that is made from the employers or the ones who are hiring for the employees for their organization, and this is a part of your monthly salary and the payment is added under HRA under the strategy that the employees can be able to find and then afford a place to live in either the metro or the nonmetro cities.

This is a major form of allowance made by the employer and there is a flaw that the employees living in their homes cannot get the house rent allowance but it is different as per the companies HR policies and might be flexible for some companies as we speak.

There are a lot of important factors that depend on calculating your house rent allowance but most of it depends on your annual salary package, and it is so because there can be major differences in living areas and cost which can differentiate the house rent allowance, but to ensure that the employer is in charge and can devise the payment, your house rent allowance will be determined on your annual pay but not on the cost of your living area or accommodation as such.

HRA House Rent Allowance

HRA Calculation

It is important for an employee as an individual to understand what would the HRA stand for through this annual pay as it comes in handy for them to find a place whose rent or the accommodation matches the similar price range as per the allowance provided by your company.

So, follow the instructions below which will help you for HRA calculation

If your basic salary is 30,000 INR, Dearness Allowance is 1,000 INR

Assuming that the house rent allowance is 10% of your gross salary then it is 5,000 INR

If the rent for the place is 4,500 INR then

  • Exempted House Rent Allowance is 1,400 INR
  • Taxable House Rent Allowance is 3,600 INR

HRA Exemption

The House Rent Allowance for any employee is tax free as per the act of Income Tax section where it states that this is living accommodation for the betterment and flexibility of the employees that cannot be taxed over in the name of Tax Free HRA Exemption.

Do I have to provide my employer and income tax with my landlord’s pan under HRA?

If your yearly accommodation or the house rent allowance cost under your landlord is over 1,00,000 INR then you need to provide the PAN card details of your landlord to your company at first and then also to the Income tax department whole making your online efiling for income tax.

What should I do if my monthly rent exceeds the present HRA from the company?

Firstly if you have a monthly rent or the accommodation cost more than your house rent allowance given from your company then you need to provide them with the receipt of it and then talk to your HR department to check if they can update the new HRA.

HRA Calculator

You may find the House Rent Allowance applicable for your basic pay, just enter your basic pay and the type of city you are working in to get the final result for your present HRA