How to HRA Exemptions for Annual Income Tax Returns.

Friends, it is general demand of all employee or any other tax payee who claims house rent allowance during annual return. More, tax payee not know how to calculation House Rent Allowance which is applicable at the time of annual return submission. Most of employee at all time wrongly bifurcation HRA exemption during the filing of annual return.

Illustration:

"X" Employee, received House rent allowance which is exempt as per the calculation prescribed under Income Tax Rule 2A which fixed exemption to the least of followings:

Excess of rent paid over 10% of salary due for the relevant period

or

if the house is in Mumbai, Kolkata, Delhi or Chennai- 50% of salary and to any other place -
40% of salary due for the relevant period

actual allowance received for the relevant period

Salary for the purpose of computation is

basic salary,
dearness allowance if provided in terms of employment and
Commission as a % of turnover achieved by the employee on due basis for relevant period

For the benefit of readers and tax payer , a calculator (Beta stage) has been built as under. Readers are requested to report any error if found

Please note that HRA exemption is not available when an assessee lives in his own house or in a house for which he does not pay rent. So rent payment evidence is very important for claiming HRA exemption.

Posted in: House Rent Allowance,HRA Exemptions,Income Tax Exemptions