Income Tax Exemption Calculation on House Rent Allowance for Central and State Government Employees with Rules and Regulations
The new rates of 7th Central Pay Commission House Rent Allowance with effect from 1.1.2016 such as 8%, 16%, 24% of basic salary
House Rent Allowance (HRA) is a consolidated amount paid to regular employees working in Government and Private organizations to adjust the expenses on rent. The house rent compensation allowance is a big support for employees to live in decent flats. Most of the occasions, the HRA element is calculated based on basic salary in the government and private sector also. And the classification of city of residence is a main criteria for determining HRA. There is no common formula for calculating HRA for men and women employees. According to the percentage notified by the Central or State Government on HRA, the calculation will be carried out in their salary slip monthly.
Also check: CG Offices Holiday List 2020 – PDF Download
House Rent Allowance is a tax-free income under Section 10(13A) of the Income-Tax. Central and State Government employees and also employees working in private sectors are getting House Rent Allowance is a major part of their salary package. HRA is given to compensate for expenses on rent for the residence of an employee. Currently, Central Government employees are getting HRA maximum of 24 percent of their basic salary (matrix pay). The minimum amount of HRA granting to the employees working in Metro cities is Rs. 4320 (minimum basic salary Rs. 18000). HRA
Simple Online HRA Income Tax exemption Calculator 2020
HRA Exemption Calculation for Govt Employees
House Rent Allowance is a Tax-Free Income under Section 10(13A) of the Income-tax Act, subject to the following conditions. House rent allowance [Section 10(13A)] of the Income-tax Act
As per section 10(13A), read with rule 2A of the Income-tax Act, the exemption in respect of HRA will be lower of the following amounts:
- 50% of salary, when the residential house is situated at Mumbai, Kolkata, Delhi or Chennai, and 40% of salary where residential house is situated at any other place.
- HRA actually received by the employee in respect of the period during which rental accommodation is occupied by the employee during the previous year.
- Rent paid in excess of 10% of salary.
Salary will include basic salary, dearness allowance forming part of salary while computing all retirement benefits and commission based on fixed percentage of turnover achieved by the employee. Apart from this, salary for this purpose does not include any other allowances/perquisites.
Salary for this purpose shall be computed on due basis in respect of the period during which the accommodation is occupied by the employee in the previous year. Hence, any payments not pertaining to the previous year or not pertaining to the period of occupation of the accommodation shall be excluded.
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