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HRA Excel Calculator| How to Calculate HRA Exemption Even WITHOUT STAYING ON RENT| House Rent Allowance | How to calculate HRA in income tax
In this video by FinCalC TV, we will see how to calculate HRA or house rent allowance exemption using Excel Calculator examples and what is HRA in salary. We will also see how you can pay rent to your parents and claim HRA to save income tax by reducing taxable income. hra exemption calculation for ay 2021-22, ay 2022-23
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House rent allowance (HRA) is a basic component of your salary. However, most of us are not familiar about the rules that can help us save tax on it. If you are a salaried employee living on rent, then here's how you can use HRA to reduce your tax liability.
Calculation of tax-exempt HRA amount
The amount of HRA received by you from your employer is not fully exempt from tax. The tax-exempt portion of the HRA is actually the minimum of the following:
a) Actual HRA received from employer
b) 50 percent of the 'salary' if the accommodation is in the metro cities (Delhi, Mumbai, Chennai, Kolkata) or else 40 percent for other cities
c) Excess rent paid annually over 10 percent of the annual 'salary'
Here 'salary' means basic salary & dearness allowance (DA) only
Special cases to claim HRA benefit
1. Rent paid to your parents
If you are staying with your parents and paying rent to them, you will be eligible to claim the tax-exemption on HRA. Experts suggest that it is advisable to have a documented evidence such as rent receipts, financial transactions, rental agreement to avoid rejection of claim by the tax department. There have been instances where the Income Tax department has rejected claims because there was no genuine proof of transactions having taken place.
2. Own a house but staying in a different city
Even if you own a house but are staying in a different city because of your job, then, too, you can claim HRA benefit if you are living in a rented property.
3. When can you not claim HRA exemption
If you are receiving HRA but are staying in our own apartment, then you cannot claim the HRA exemption benefit. The whole HRA amount received will be taxable in your hands.
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