Struggling with HRA and Rent? How Much Tax Benefit Can You Really Get on a 35k Salary?

Dear All, I am working in a Pune-based company. My salary is INR 35,000 per month. As per my salary structure, I am getting INR 2,800 as HRA, but I am paying INR 9,000 as rent. So, I am not receiving the full benefit of HRA in income tax. Can anybody tell me how much HRA benefit I can get in income tax if I am earning INR 35,000 per month?

Understanding Basic Pay and HRA Benefits

What is your basic pay? For Pune, you can claim 40% of your basic as HRA to avail of I.T. exemption. Talk to your HR for structuring the HRA as 40% of your basic pay.

If you have the freedom to design your own salary structure, then keep the basic salary at the highest possible level. For example, at a salary of ₹35,000, if we keep the basic salary at ₹20,000, the maximum benefit under House Rent Allowance (HRA) that can be given to you is 40% of the basic (as you are residing in a tier II city). This will provide you with a tax benefit of ₹8,000 per month on the production of rent receipts.

Regards,
Amit

Income Tax Exemption Calculation Formula in 6 Steps for HRA

1. HRA received from the company: 2800 pm X 12 = 33600.00
2. Actual rent paid: 9000 pm X 12 = 108000.00
3. 10% of basic + DA + personal pay: your monthly amount X 12 = ????
4. Difference (2-3) = ????
5. 40/50% of basic + DA + personal pay: calculate 40% in your case
6. Exempted (lowest 1, 4, 5) = ????

You can use the above formula to calculate your HRA exemption.

Regards,
Payroll Solutions