HRA Calculator

Your monthly income is comprised of different allocations, including your travel allowance, provident fund contribution, and more. One key element in this allocation mix is your House Rent Allowance (HRA). Provided by your employer, the HRA is intended to cover the money you spend on rent each month. Understanding the nuances of HRA becomes even more critical when you factor in tax exemptions, which are available under section 10 (13A) and Rule 2A of the Income Tax Act, 1961.

HRA tax exemption is applicable only if you reside in rented accommodation. To determine the extent of your exemption, you can utilize tools like the HRA tax exemption calculator or the HRA calculator online, which streamline the process. This not only simplifies your calculations but also ensures accuracy.

Now, let's delve into the HRA calculation formula. The calculation typically takes into account factors such as the actual rent paid, the HRA received, and certain other considerations outlined in the Income Tax Act. To make this process more efficient, consider using an HRA tax calculation tool, which often incorporates the HRA calculation formula.

Understanding the dynamics of HRA and its tax implications is vital for maximizing your exemptions. Using tools like the HRA calculator online or the HRA tax exemption calculator can simplify the process, allowing you to make informed decisions about your finances.

 How to use the HDFC Life HRA calculator?
 

The monthly income you earn has various allocations, such as travel allowance, provident fund calculation and more. House Rent Allowance (HRA) is one such allocation—HRA calculation can happen in simple steps. Your employer offers this allowance for the money you pay as rent each month. There are certain HRA tax exemptions available under Section 10(13A) and Rule 2A of the Income Tax Act, 1961.

However, HRA tax exemption is available only on rented accommodation. Let’s learn more about the HRA and ways to calculate HRA tax exemption. The easiest way to do it is to use an HRA calculator online.

Here’s a step-by-step guide on HRA calculation with the online HRA calculator by HDFC Life:

1. Fill in the basic salary received, dearness allowance, HRA received and total rent paid annually. Also, select if you stay in a metro city or not.
2. Once you have filled in all the details, the online HRA calculator by HDFC Life will give you complete information, including the amount of HRA exempted and HRA chargeable to tax.

How is HRA exemption calculated for special cases?
 

There are certain special cases that must be accounted for, while going for an HRA deduction calculation.

• If you own a house in a different city: Say you are living in X city but own a house in another one, you can still claim HRA. Plus, if you are paying home loan EMIs for the house, you are also eligible for a tax deduction under Section 10(13A). You can find out the details simply by using the HRA exemption calculator.
  
• If you pay rent to your family members: It’s a special case if you pay rent to your family members. But even then, you can claim an HRA deduction if you are able to furnish rent receipts and the rental agreement as proof. The process remains the same; you can easily make the HRA calculation using the online HRA calculator, as well as the HRA calculation for income tax. However, you cannot get this benefit if you own the property or if it is owned by your spouse.
• Rent shared with your spouse: Under these circumstances, HRA deduction can be claimed but only by one person. In caseyou can manage to furnish rent receipts for rental payment, then it is possible to claim HRA exemption separately, by both individuals. But make sure there is no duplication that happens because it could lead to heavy questioning and severe consequences by the tax department.
  
• In Case of Non Receipt of HRA : If you stay in a rented accommodation but do not receive HRA from your employer or you are Self Employed you can still claim deduction under Section 80GG. 
  
  Conditions to be fulfilled :- 
  
  • Self Employed or Salaried
  • HRA should not have been received anytime time during the year
  • You or your spouse should not own any residential house in the current place of business or employment

• Section 80GG
  
  Eligibility: Deduction under this section can only be availed if you are paying rent but not receiving HRA u/s 10(13A)

• Deduction Limit:
  
  Least of the following will be exempted from tax:
  • 5000 per month;
  • 25 % of Adjusted Total income¹
  • Actual Rent Paid (-) 10% of Adjusted Total Income¹

To claim 80GG deductions, you must submit Form 10BA along with your income tax returns (ITR), along with rent receipts, your rental agreement.

Important Rules to Remember for HRA Deductions

• You cannot claim an HRA tax exemption if you are paying rent to your spouse.
• In case the landlord is an NRI, a 30% TDS (Tax Deducted at Source) will be deducted from rent.
• Employees living in their own homes and receiving HRA are not eligible for exmeption
• Maintenance charges paid for your apartment cannot be included for tax exemption. HRA deductions are specifically allowed for rent payments only. Expenses such as maintenance charges, electricity charges, utility payments, and similar costs are not considered eligible for tax exemption.

What are the documents required to claim HRA deductions?

These are some of the documents that are required to claim HRA deductions:

• Furnish rent receipts that clearly mention the date, landlord’s and tenant’s name, PAN details of the landlord, the address of the rental accommodation, stay duration as well as rent receipt with a revenue stamp that has been cross-signed by the landlord.
• In case your employer does not offer HRA deduction, you can still claim the HRA exemption under Section 80GG of the Income Tax Act by submitting your PAN details and a copy of the PAN of the landlord, if the rent paid exceeds Rs 1 lakh annually. You will also need a copy of the rental agreement. This rule is applicable even if you are paying rent to your family members. You may also have to show financial transactions made through copies of bank statements.

ARN - INT/MC/12/23/7045