hra exemption calculator for salaried employees

HRA Exemption Calculator for Salaried Employees

This HRA Exemption Calculator for Salaried Employees will help you to know your HRA exemption amount to be claimed to save income tax.

Using 3 inputs – Basic Salary + DA, HRA amount received and rent you pay, you can easily know the HRA exemption limit applicable to you in order to save income tax.

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Table of Contents

Note: Above calculator helps you to calculate approximate HRA exemption amount when you work in one organization throughout financial year. In case you switch the jobs or when your rent amount changes in same financial year, then you have to carefully track those numbers on monthly basis to reach the actual HRA exemption limit you can claim to save income tax. Check below video on HRA exemption calculation using excel.

Also, you can claim HRA even if you don’t stay in rented accommodation. Watch full video to know more.

HRA Exemption Calculator for Salaried Employees Video

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WHAT IS HRA

  • HRA full form is House Rent Allowance
  • If you are salaried employee, you must be receiving HRA component. You can confirm this from your Salary slip of any month
  • HRA is provided to you so that it helps you pay your rent if you stay in rented accommodation
  • Not all of us stay on rent, so this HRA amount becomes taxable if you do not stay on rent
  • But, if you stay on rent, you can claim HRA exemption to reduce your taxable income which will help save your Income Tax
  • There are certain rules you need to follow along with HRA calculation formula you must use to calculate HRA exemption, because not entire HRA amount can be exempted from taxable income

HRA Exemption Calculator Online

The above HRA Exemption Calculator for Salaried Employees helps you calculate the HRA amount you can claim to save Income Tax. But here are few points you should consider:

  • The HRA calculator would give you accurate results when you provide correct information of your Basic + DA components of your salary, HRA amount received and the rent paid by you, all figures on yearly basis
  • It does not take into account the change in basic salary or rent components in between the financial year
  • If you live in metro city then 50% of basic salary will be considered else 40% will be considered in non-metro city to calculate your HRA exemption amount
  • This HRA calculator gives you a rough idea about the approximate amount you can claim as HRA exemption to save Income Tax.

ALSO READ: Other Tax Saving options available for Tax Payers

How is HRA Exemption Calculated

The above HRA Exemption Calculator for Salaried Employees can help you calculate your exemption limit easily. But let us understand the working of this calculator:

  • The amount you receive as HRA (HRA full form is House Rent Allowance) is not fully tax exempted
  • The Tax exempt portion should be minimum of the following calculations:
    1. Actual HRA received from employer
    2. 50 percent of the ‘salary’ if the accommodation is in the metro cities (Delhi, Mumbai, Chennai, Kolkata) or else 40 percent for other cities
    3. Excess rent paid annually over 10 percent of the annual ‘salary’

where Salary means “Basic Salary + Dearness Allowance”

  • You can claim full HRA received in #1 only when the number is higher in #2 and #3 calculations above
  • Let’s understand this with the help of examples below

CALCULATION FORMULA

Let’s consider below example of Rent, Basic Salary and HRA:

HRA Exemption Calculator using Excel by FinCalC
HRA Exemption Calculator using Excel by FinCalC

And below are the calculations based on above calculation formulas:

HRA Exemption Amount Calculator
HRA Exemption Amount Calculator

#2 calculation above is minimum of all 3. So you can claim Rs. 95,400 as HRA and reduce this amount from Taxable income to calculate your Income Tax using Old Tax Regime.

Let’s understand how we reached to this figure:

Actual Rent = Rs. 1,20,000
10% of Basic Salary = 10 * Rs. 2,46,000 / 100
10% of Basic Salary = Rs. 24,600

So Actual Rent minus 10% of Basic Salary becomes Rs. 1,20,000 – Rs. 24,600 = Rs. 95,400

This is how HRA calculation works.

Saving Income Tax by claiming HRA

You can save Income Tax by claiming HRA amount (based on above calculator) if you stay on rent, only when you choose Old Tax Regime to calculate your Income Tax. HRA exemption is not allowed in new TAX regime since it has reduced Tax Slab rates.

Watch below video to know more ways to save Income Tax:

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HRA Exemption Section for Income Tax

Exemption section is Section 10 (13a).

HRA exemption without HRA component in salary is also possible if you claim deduction under Section 80GG.

HRA Exemption Calculator in Excel

You can also download the HRA exemption excel calculator for offline use from below link.

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Conclusion

HRA Exemption Calculator for Salaried Employees can be used to know your HRA Exemption limit.

You can claim HRA (House Rent Allowance) in order to save income tax under Section 10. If you don’t receive the HRA component in your salary, you can claim maximum of Rs. 5000 pm (Rs. 60,000 in a year) under Section 80GG.

The calculations for HRA exemption limit allowed will be based on minimum of below 3 formulas:

  1. Actual HRA received in a financial year
  2. Rent paid – 10% of Basic Salary + DA
  3. 40% of Basic Salary + DA in non metro city or 50% in metro city

Minimum number from above 3 calculations will be considered as exemption limit which will be deducted from your gross income to save income tax with Old Tax regime.

In case you switch jobs or your salary is increased due to promotions or bonuses in same financial year, you can calculate HRA exemption based on updated salary amounts. Watch this video on HRA calculation on different salary with examples to understand this scenario.

Some more Reading:

FREQUENTLY ASKED QUESTIONS (FAQS)

What is HRA exemption limit?

HRA exemption limit is based on the calculations  shown above using Basic salary, HRA component in your salary slip and the rent you pay

HRA exemption in new tax regime allowed?

HRA exemption in new tax regime is not allowed since new tax regime has reduced tax slab rates, and no deductions are allowed in new tax regime for you to save any more income tax

HRA exemption without PAN?

HRA exemption without PAN of landlord is possible when the total rent paid by you in FY is less than Rs. 1 Lac, or less than Rs. 8,333 per month. In case the total rent paid by you is more than Rs. 1 Lac in a FY (April to March), you need to provide PAN of landlord

What is HRA exemption section?

HRA exemption section is Section 10 (13a)

HRA exemption without rent receipt?

HRA exemption without rent receipt is not possible since rent receipt are the proof that you pay rent. It is better to ask landlord to provide you rent receipt

HRA exemption without HRA component in salary?

HRA exemption without HRA component in salary is also possible if you claim deduction under Section 80GG

Can I claim HRA without staying on rent?

Yes you can claim HRA received as part of your salary without actually staying on rent. If you are staying with your parents, you can transfer the rent amount every month in their bank account digitally, and also have rent receipts signed from them.

Remember, your parent must be the owner of the house you are staying in and also, the rent amount will be treated as their Income on which they will have to pay Income tax on that amount if they belong to taxable bracket based on the financial year.

It’s important to keep the rent receipts and rent declaration as well if you are paying rent to your parents. This way you save income tax as well as allow the rent amount to be within the family to have double advantage!

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Income Tax Calculator App – FinCalC

For Income Tax Calculation on your mobile device, you can Download my Android App “FinCalC” which I have developed for you to make your income tax calculation easy.

What you can do with this mobile App?

  • Calculate Income Tax for new FY 2024-25 and previous FY 2023-24
  • Enter estimated Investments to check income tax with Old and New Tax Regime
  • Save income tax details and track regularly
  • Know how much to invest more to save income tax
  • More calculators including PPF, SIP returns, Savings account interest and lot more
Download Income Tax Calculator APP from play store
Download Income Tax Calculator APP from play store

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