House Rent Allowance (HRA) Taxability And Calculations
HRA: Taxability And Calculations

HRA Introduction:

In a growing world, everyone wants to be live comfortably and without relief of worries. Some people have their own business, and some are employees in multiple companies. However, an employee has many expenditures to live his life, and the major one is expenses for house rent.

For this purpose, many companies have a facility to give House Rental allowance for their employees. Companies provide house rent allowance as a part of its monthly income. However, only individuals and taxpayers or a HUF and people who get an HRA component in its salary can claim for HRA.

House Rent Allowance Taxability:

House Rent Allowance is known as HRA, is a facility that has given to the employees as a part of the salary. HRA helps the employee to provide tax benefits for their accommodation every year. HRA will pay according to the employee's salary and the city of residence. The regulation of HRA by the provisions of Section10 (13A) under the Income Tax Act,1961. Hence house rent allowance taxability is beneficial for salaried employees in India.

HRA (House Rent Allowance) Calculation:

An employee can partially or fully claim rent allowance based on its salary package or rent agreement with the owner. If you will get the HRA component in your salary package but are not living in a rental House, the HRA of your salary has become fully taxable. The amount can claim against House Rent Allowance mention below.

In the case of metros,50% of the Basic+0 DA+ commission received on sales turnover.
Actual HRA received
40% for non-metros
All amount describes the period of basic accommodation. If you live in rented space for one year, you will get basic, HRA received and DA, etc. for six months only.

Need To Know While Claiming HRA:

If rent pays to exceed over one year, then the PAN will cancel because PAN is necessary for the landlord. So, the landlord should state a declaration.
If you are using your brother, father, or sister's rent house, you can claim HRA for the rental House.
If the amount paid for rental House by husband and wife both can claim house rent allowance.
If, due to some reasons, HRA is not claiming during a year, you will return income tax.
Eligibility Criteria For HRA:

Only salaried employees have the facility to claim an HRA under the income tax Act, 1961. Moreover, the self-employed can also claim house rent allowance under Section 80GG; however, If any employee has their own house, don't claim HRA to save on taxes. Hence, it seems that there are strict criteria for claiming HRA.

Rules Applicable For HRA:

The house rent allowance is not exceeding more than 50% of the basic salary of any employee.
An employee can get many pros after claiming of HRA, including tax benefits and a home loan.
A salaried person can't claim for the full amount of rental House. But the exemption will be lower as well.
If your rental House has 1,00,000 amount, then you need to submit the landlord's PAN, and it is mandatory. In any case, if anyone cannot have PAN, they must have to submit self-declaration.

Claiming Tax Deduction On HRA:

If you have HRA a component in your salary for rental accommodation, you can indeed reduce income tax liability for specific conditions. According to the rule, you will get the tax deduction of 2 lack for paying the home loan. Many people have a question in mind that if they pay a home loan and rent a house, can they deduct tax liability?

Well, the answer is yes, you can legally reduce your income tax for paying both. However, it isn't easy to justify all cases, but allowability depends based on the claim. There should need to understand that India's government provides many necessary facilities for its employees to stand out in a growing world.

Frequently Asked Question (FAQ):

Can I get a rebate if I am staying at my House?

No, you cannot claim for the exemption of HRA if you are living in your own House. The company will never provide the House Rent Allowance.

I have House in another city, but I am living on rent in another city; can I claim HRA?

Yes, you can claim for House rent allowance to stay at rent another city while having their own House in another city.

If my House under construction, can I claim for HRA?

Yes, you can claim for House Rent Allowance in a case under-construction house.

 Can I claim HRA and deduction in paying income tax?

Yes, you claim for House Rent Allowance and deduction in paying income tax based on the employee salary and some condition.


Drafted By:
CS.A.Maniraj.,B.Com.,ACS.,CA(Fin), Independent Director 
Certified CSR Professional., Certified GST Professional

House Rent Allowance (HRA) Taxability And Calculations
Maniraj Anantham 5 December, 2022
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