Example for calculating Exemption for House Rent Allowance

House Rent Allowance calculation X is working in a non metro city and receives a basic salary of Rs. 14, 500, Dearness Allowance as Rs. 3000 and does not receive any commission. If he has paid Rs. 3000 as house rent while receiving house rent allowance of Rs. 4000. Let us calculate what will be his taxable house rent allowance;

 

Particulars

Calculation

Amount (Rs.)

Actual house rent allowance 4000*12 48, 000
Less: Exemption under section 10 (13A) to the extent of least of the followings:

  1. Actual House rent Allowance received
  2. Actual house rent paid minus 10% of salary
  3. 40% of Salary
48, 000

(3000*12) – 10% of Rs. 2, 10,000 = 15, 000

40% of 2, 10,000 = 84, 000

 

 

(15, 000)

Taxable HRA 48000 – 15000 33, 000

 

Salary for the purpose of house rent allowance calculation = (14, 500 *12) + (3000*12) = 2, 10,000

Income Tax Provisions for House Rent Allowance

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