House Rent Allowance (HRA) is a component of the salary package provided by employers to assist employees in meeting the latter’s rental accommodation expenses.
HRA serves to offset the financial burden of renting a house for those who don’t own a residential property. The Income-Tax Act allows for the exemption of a portion of the HRA from taxable income, subject to certain conditions.
The HRA Calculator is provided for the purpose of awareness and ease of calculation. It is not intended to provide any advice for your specific taxation requirements.
For personalised tax-related queries, please consult your tax consultant or qualified financial advisor.
Tax planning varies for individuals based on personal financial requirements. It should be a part of a comprehensive personal financial plan.
The House Rent Allowance (HRA) Calculator is an online tool designed to simplify the process of calculating HRA exemptions in India. It eliminates the need for manual calculations and ensures accurate results based on the provisions of the Income Tax Act. By using the HRA Calculator, you can maximise your tax savings and optimise your financial planning.
The HRA Calculator provided by 1 Finance requires you to enter some basic details, including:
Basic salary, which includes Dearness Allowance (Note: Dearness Allowance is applicable to government employees only)
Actual HRA received from your employer
Actual rent paid for your accommodation
Confirmation of whether you reside in Mumbai, Delhi, Chennai, or Kolkata
With these inputs, the calculator applies the relevant tax rules and formulas to determine the taxable and exempt portions of your HRA. It provides you with accurate results quickly and efficiently, helping you understand the taxability of your House Rent Allowance.
According to the Income-Tax Act, the maximum exemption allowed for HRA is calculated as the lowest value among the following three options:
Option 1: Actual HRA received from your employer
Option 2: Actual rent paid minus 10% of your basic salary (including dearness allowance)
Option 3: 50% of your basic salary (including dearness allowance) for residents of Mumbai, Delhi, Kolkata, or Chennai; or 40% for residents of other cities
By calculating your House Rent Allowance online, you can determine the exempted and taxable portions of your HRA based on the maximum exemption allowed.
1 Finance HRA calculator also computes the "Ideal Rent” based on your basic salary, HRA received and the city of residence. This is the optimal amount of rent that can be paid to claim the maximum amount of exemption from the HRA received.
1 Finance's HRA Calculator accurately computes your House Rent Allowance (HRA) online, determining the taxable and exempt portions. With just three or four simple steps, you can effortlessly calculate your HRA exemption and accurately assess your Income Tax liability.
This reliable tool ensures error-free calculations, making it an effective and convenient solution for calculating HRA exemption in India.
Over and above the HRA exempted from tax, this calculator also provides you with the optimal amount of rent (Ideal Rent), payment of which will ensure maximum tax saving.
Under section 10(13A) of the Income-Tax Act, employees can claim tax exemption for the HRA received from their employers.
The amount of HRA exemption that an employee can claim depends on their salary, the location of their residence, and the amount of rent they pay.
However, it's important to note that the entire HRA amount is not exempted.
To claim HRA exemption, you need to meet the following conditions:
You must be living in rented accommodation. If you own a house (in the same city) or live rent-free, you are not eligible for HRA exemption
You must actually pay rent for your accommodation. Valid rent receipts serve as proof of rent payments and should include details such as the landlord's name, address, payment period, and amount paid
If your annual rent exceeds ₹1 lakh, you need to provide the PAN of your landlord
HRA should be received as a part of your salary from your employer
HRA exemptions are specifically available to individuals who receive a salary from their employers and pay rent for their accommodation.
Self-employed individuals, who don't fall under the employer-employee relationship, are not eligible for HRA exemptions.
However, they can claim a tax deduction of either ₹5,000 per month or 25% of their total income (whichever is lower) under Section 80GG if they are paying rent for their accommodation.
To claim HRA exemptions, you need to have the following documents:
Rent receipts for the relevant financial year
Copy of the rent agreement