HRA - salary structure.. CiteHR
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Shweta Swarnkar Started The Discussion:

Dear All,

Kindly give me some insight of HRA

1. What actually it is?
2.Does the % vary from company or it has to be fixed?
3. Does it vary from location to location ( metro, non-metro etc)
4. What is the % decided by factories Act
5. How low HRA will be a benefit or loss to employers?
6. How low HRA will be a benefit or loss to employees?

Regards,
Shweta Swarnkar

nilendrachand -  Member Since: Aug 2007
Dear Shweta,

Answers are as follows:

1.What actually it is?
Ans) HRA is House Rent Allowance which is paid by the company to its employee in the event where the company is unable to provide accomodation. This is given so that an employee wont have to shell out money from his pocket in order to provide himself accomodation.

2.Does the % vary from company or it has to be fixed?
Ans) It depends upon the comany. Normally it is fixed on grade but also it can be determined as a fixed percentage of Basic Salary.

3. Does it vary from location to location ( metro, non-metro etc)
Ans) Normally it does not vary from place to place but few company can have such policy. It cannot be really commented upon.

4. What is the % decided by factories Act
Ans) Factories Act says nothing on this.

5. How low HRA will be a benefit or loss to employers?
6. How low HRA will be a benefit or loss to employees?
Ans(for 5&6) HRA is low or high depends upon the place. Say, in a metro, HRA of 10000 is not high, if you want to have a decent house in a decent location but in a non metro it can be high. So, HRA is low or high really depends upon the Place and also the liking of individuals (For choice of house/Location)

Regards,
Nilendra

nilendrachand -  Member Since: Aug 2007
Dear, 50% because, you get tax exemption upto 50% of basic & DA in metro. Regarding 18%, i have no clue.... Regards, Nilendra

samanaveenkumar -  Member Since: Nov 2007
HRA-house Rent Allowance It differs according to grade(salary) It differs from metro to Non- Metro city

Amitmhrm -  Member Since: Feb 2007
Hi Shweta,

HRA is home rent allowance which is a component of salary structure to save taxes.
Yes, the percentage vary from company to company as well as place to place.. Generally it varies from 40 to 60% of basic..
HRA will be a benefit for an employee at the time of tax payment..

Regards,

Amit Seth.









1. What actually it is?
2.Does the % vary from company or it has to be fixed?
3. Does it vary from location to location ( metro, non-metro etc)
4. What is the % decided by factories Act
5. How low HRA will be a benefit or loss to employers?
6. How low HRA will be a benefit or loss to employees?

Hemachandra -  Member Since: Oct 2007
Hi,

Please see the HRA calculation


HRA Tax exemption?
The exemption from IT will be given to the least of the following 3 conditions

1. Actual HRA recd
2. 40 % of Basic and 50 % for Metropolitan city
3. Rent paid- 10 % of basic salary

Regards
Hemachandra

akshita_ashu -  Member Since: Nov 2007
Hi well i agree with Hemchandra regarding HRA, HRA depends on company to company's HR policy but normally its 40% in non metro cities ie other than DEL, MUMBAI, KOLKATTA, CHENNAI etc
and in metro cities its 50% of basic salary but like mine orgn we getHRA as 60% of basic salary.
But HRA IT exemption calculation will be on the least of below given conditions:

1)Actual HRA received
2)40%of basic salary(non metro cities)or 50%of basic for metro cities
3)Actual Rent paid -(minus)10% of basic.
Minimum of the above will be considered for exemption.

akshita_ashu -  Member Since: Nov 2007
Hiiii to those who have confusion in HRA
eg. UR Basic salary is 5600(in Delhi)
Calctn of IT Exemption

1)Suppose Actual HRA u receive is 2500.
2)50%of 5600(since in Metro City)is 2800
3)Actual Rent paid - 10% of BS ie 2300-10%of 5600 is 2300-560=1740

So from above 3st. ur Rs.1740 will be exmpted for tax purposesas it is least.

Well I hope i'm right if any mistake then plz do correct me.

Akshita :lol:

Jeroo Chandiok -  Member Since: Oct 2005
Dear Shweta,

By itself House Rent Allowance can be given as a percentage of basic salary or as a fixed sum, it can be the same percentage for all grades, or in the case of fixed sums, it can differ from grade to grade.

However, if you want to take as much advantage of tax exemption as possible, then the formula provided by earlier posts has to be considered while fixing HRA.

Jeroo

Jasmine Naik -  Member Since: Feb 2007
Dear all,Thanks for the information I got here about HRA, it helpled me a lot. But, in my Company my director want to form different salary structure for different employees, and for some he want HRA amount to be nil.Is is permissable? if yes, is it advicable to do so please help me with these queries.With regards,Jasmine

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