Can We Increase the HRA Component to 60% of Basic Salary? Seeking Your Insights

Dear Forum Members,

We are in the process of restructuring our salary structures. Currently, we have the HRA component set at 40% of the basic salary. We would like to inquire if it is possible to increase the HRA component to 60% of the Basic. Your input on this matter would greatly assist us in the restructuring process.

Thank you,
Sharath

Hi Sharath,

The HRA component - 40% of basic in non-metros & 50% of basic in metros - is admissible for tax exemption.

Regards, R. Ponraj

Hi Sharath,

As such, there is no ceiling percentage for fixing the HRA component. You can fix it at 60% of the basic. However, as stated by R. Ponraj, only 40% in non-metros and 50% in metros will be considered for tax exemption. The remaining amount will be counted as taxable income.

Regards,
Gaurang