Example for calculating Exemption for House Rent Allowance

Mr. 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;

ParticularsCalculationAmount (Rs.)
Actual house rent allowance4000*1248, 000
Less: Exemption under section 10 (13A) to the extent of least of the followings:   Actual House rent Allowance received Actual house rent paid minus 10% of salary 40% of Salary48, 000   (3000*12) – 10% of Rs. 2, 10,000 = 15, 000 40% of 2, 10,000 = 84, 000(15, 000)
Taxable HRA48000 – 1500033, 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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