HRA Calculator 2024

What is a HRA?

For every salaried individual, a component of their salary is reserved for paying their house rent which is called as House Rent Allowance (HRA). It is a significant benefit provided by employers to cover the rent of their employees. It is partially or fully exempt from taxes under certain conditions

HRA slabs depend on the city you reside in. For example, if you stay in metropolitan cities like Mumbai, Delhi, Bangalore, Chennai, or Hyderabad, the HRA allowance may go upto 27%. For tier 2 and tier 3, the HRA component may be upto 18%

Is HRA Taxable?

HRA Is a component of your salary, therefore it is considered as a taxable income. However, you can an exemption of HRA partially or wholly under Section 10 (13A) of IT act. However, if you do not live under a rented exemption, your salary is fully taxable. The tax exemption is not available in case you choose the new tax regime

HRA for self-employed people

Individuals who are self-employed are not eligible for tax exemption. However, they can avail tax exemption towards rented accommodation under section 80GG

How to Claim HRA Exemption?

• To claim HRA Exemption, you must fulfill certain conditions
• Live in rented accommodation
• Receive HRA as part of your CTC
• Submit valid rent receipts and proof of rent
• HRA exemption calculation will depend on various factors like rent, salary, and city the employee is residing in.

What is an HRA Calculator?

An HRA calculator is a tool that helps employees calculate the tax exempt portion of their HRA based on their salary, actual rent paid, and city where they reside

How Does an HRA Calculator Work?

The HRA calculator computes the tax exemption based on the least of the following:

1. Actual HRA received from the employer
2. 50% of salary (for metro cities) or 40% (for non-metro cities).
3. Actual rent paid – 10% basic salary + DA

Formula for HRA Calculator

It is based on the minimum exemption among the following

• Actual HRA received.
• 50% or 40% of basic salary (metro/non-metro).
• Rent paid minus 10% of the basic salary.

Example

For an employee with a basic salary of ₹40,000, rent paid ₹20,000, and HRA received ₹10,000 in a metro city:

• 50% of basic salary = ₹20,000.
• Rent paid – 10% of salary = ₹20,000 – ₹4,000 = ₹16,000.
• The actual HRA received = ₹15,000
  Therefore, the HRA exemption is ₹15,000 (the least of these).

Benefits of HRA Calculator:

• It simplifies the HRA calculation
• It ensures accurate financial planning
• Provides clear exemption of how much HRA can be exempt

5 FAQ for HRA Calculator

1. Can I claim HRA if I live with my parents?
Yes, you can claim HRA if you pay rent to your parents and have a valid rental agreement.

2. Is HRA fully exempt from tax?
No, only a portion of HRA is exempt based on rent, salary, and location.

3.What if my employer does not provide HRA?
You may still claim rent expenses under Section 80GG if you meet certain conditions.

4. Does the HRA calculator account for rent-free accommodation?
No, the HRA calculator is only for employees receiving HRA and paying rent.