25 January, 2015

Way to Calculate HRA Exemption for Salaried Employees During FY 2014-15 and AY 2015-16

Conditions to Claim HRA Exemption 

House Rent Allowance is normally called HRA by the assesee. The HRA means House Rent Allowance received by you from employer in respect of residential accommodation occupied by you. So in simple words the employer will pay you the rent which you are paying for your rented accommodation.

* You should stay in rented accommodation.
* You should pay rent to the owner regularly.
* The accommodation or premises are not owned by you or any of your family member.
* You should produce all the rent receipts in proof of actual payment.
* If you are getting HRA up to Rs.3000 per month, then you are not required to produce the rent receipt.

Calculation of HRA

You are entitle to get exemption of the least of the following:

1. Actual house rent allowance received
2. Rent paid in excess of 1/10 of salary,(Salary=Basic+D.A)
3. choose one of these:
    a. If you are residing in Bombay, Calcutta, Delhi or Madras, then 1/2 or 50% of your Annual (Basic+D.A) Salary.
    b. If you are residing in any other place; 2/5 ie 40% of your Annual (Basic+D.A) Salary
4. If your Location of Residence is changed during the year you have to calculate the above calculation on monthly basis.

Now You may Claim the least of 1,2,3 of above as HRA Exemption.

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