Calculation For HRA - Income Tax
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Calculation For HRA - Income Tax

madhuarepalli Started The Discussion:

Hi,

I referred the some sites for HRA(tax saving) calculation but i couldn't able to find the exact calculation for HRA.

I would like to know the calculation for below example.

Basic 81360 per annum
HRA 24000 per annum

i am paying the rent 84000 per annum and living in metro city.

I am requesting the calculation for above example.

Regards,
Arepalli

rldhingra - Member Since: Sep 2010
Hi Madhuarepalli
wishing you happy new year .
in cities having population of 4,00,000 and above 20% of basic salary is generally considered to be the HRA
in metro cities like Delhi,Calcutta, Mumbai ,Bangalore, Chennai and Ahemdabad 40 % of basic is taken as HRA component.You may please contact any chartered account who will be in better position.
I hope the above will give you a brief idea.
Thanks & Regards
RLDhingra,Advocate,
Labour Law Consultant, Delhi
09818309937 E-mail:

kumarviju - Member Since: Dec 2011
HI, The HRA will be caluculated as 50% of basic salary in case of metropolitant cities and 40% of basic salary in case of other cities. Regards Kumar

apsarahr - Member Since: Oct 2011
Hi, I have an query pls provie the details, in bonus maximum is 20% why it fixes 20 only .

aditya84tiwari - Member Since: Dec 2009
Dear Arepalli,
HRA is min 5% and max 50% exempted for IT.
In metros exemption is max 50% and in non metros its max 40%.
your HRA per month is 2000.
Your rent per month is 7000.
In metros 50% HRA of basic is exempted. In your case 50% of basic is 3390.
the HRA is decided on below mentioned 3 parameters which ever is the least.
1) 50% of basic which is 3390
2) HRA alloted by your company which is 2000
3) monthly rent minus 10% of basic i.e. 7000-678= 6322.
whithin above 3 parameters your actual HRA alloted by your company is the least and so 2000 rupees will be exempted from IT monthly from your salary.

Anjani32 - Member Since: Oct 2009
Hi,

As per section 10(13A) of Income Tax Act the exemption of HRA is to be calculated based on the following:

Least of the following will exempt from Tax:
1) Actual HRA Received,
2) Rent Paid over 10% of salary,
3) 50%/40% of Salary.

For this purpose salary means Basic+DA.

Calculation for the figures given by you will be following:
1) Actual HRA Received: Rs. 24000 per month,
2) Rent Paid over 10% of Salary: Rs. 84000-(10% of 81360), i.e 84000-8136=75864
3) 50% of Salary: 50% of Rs. 81360, i.e 40680/-.

The least of above 3 is Rs. 24000, hence the whole HRA you are getting will be exempt from Tax.

For detailed you may refer to the Income Tax website and serach for section 10(13A).

Hope this will be fine with you.

Take care

ravitashukla1 - Member Since: Jun 2010
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prasadu551@gmail.com - Member Since: Oct 2010
Hi, I want some information about IncomeTax , give clarity these words in Income Tax - "Deductions under chapter via"? -"EC+Secondary& Higher EDU Cess" Regards, prasad

jonssmith3 - Member Since: Jan 2012
hra means as listed below it is also important like dra or pf.

Health Reimbursement Accounts or Health Reimbursement Arrangements (HRAs) are Internal Revenue Service (IRS)-sanctioned programs that allow an employer to set aside funds to reimburse medical expenses paid by participating employees.

Using an HRA yields "tax advantages to offset health care costs" for both employees as well as employers.


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Anjani32 - Member Since: Oct 2009
Hi Prasad,

As you mentioned "deduction under chapter via" it should read as Deductions under chapter VI A.

In income tax act different sections are arranged in different chapters. Likewise this Chapter VI A talks about the deductions available/allowable to an assessee under sections 80A to 80U. The most commonly used section 80C is also under the same chapter.

Another thing EC & Secondary & Higher Edu Cess. The first one stands for Education Cess and that for other Higher Education Cess. These both is to be mandatorily levied upon tax payable computed on the net income of an assessee. The rates are 2% & 1% respectively on tax payable.

Hope this clarifies.



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