If you are salaried person then you can claim House Rent Allowance (HRA) to meet your rented accommodation-related expenses. Salaried individuals who live in a rented house can claim this exemption and bring down their taxes. HRA can be fully or partially exempt from tax. HRA exemption calculator will help you calculate what portion of the HRA you receive from your employer is exempt from tax and how much is taxable.
If you are not living in a rented accommodation but still get house rent allowance, the allowance will be fully taxable.
The entire HRA received is not always fully exempt from tax. The least of the following three will be taken to exempt from tax: HRA received from your employer
Sonu lives in Ahmedabad. His basic salary: Rs 30,000 per month Rent he pays: Rs 16,000 a month And HRA Received: Rs 13,000 The HRA exemption he would get would be the least of the following:
And, HRA Chargeable tax will be calculated as: HRA Chargeable tax = Least of above three - HRA amount In our example HRA amount is Rs 13,000 and least of all three amount is Rs 12,000 then HRA chargeable tax is Rs 1,000.