HRA Calculator| How to Calculate HRA Exemption Even WITHOUT STAYING ON RENT| House Rent Allowance

HRA Excel Calculator| How to Calculate HRA Exemption Even WITHOUT STAYING ON RENT| House Rent Allowance
In this video by FinCalC TV, we will see how to calculate HRA or house rent allowance exemption using Excel Calculator examples. We will also see how you can pay rent to your parents and claim HRA to save income tax by reducing taxable income.

After watching this video following queries will be solved:
What is HRA or House Rent Allowance?
How to calculate HRA exemption amount?
How to claim the HRA benefit to save Income Tax?
How to claim HRA by paying rent to parents?
How to claim HRA without staying on rent?
When can you not claim HRA exemption?
Claim HRA by staying in different city?
Claim hra and loan emi installments


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House rent allowance (HRA) is a basic component of your salary. However, most of us are not familiar about the rules that can help us save tax on it. If you are a salaried employee living on rent, then here’s how you can use HRA to reduce your tax liability.

Calculation of tax-exempt HRA amount
The amount of HRA received by you from your employer is not fully exempt from tax. The tax-exempt portion of the HRA is actually the minimum of the following:
a) Actual HRA received from employer
b) 50 percent of the ‘salary’ if the accommodation is in the metro cities (Delhi, Mumbai, Chennai, Kolkata) or else 40 percent for other cities
c) Excess rent paid annually over 10 percent of the annual ‘salary’

Here ‘salary’ means basic salary & dearness allowance (DA) only


How to claim the benefit
To avoid excess TDS from being deducted from your salary, you will have to provide rent agreement and/or rent receipts to your employer. If your annual rent payment is more than Rs 1 lakh, then you will provide your landlord’s PAN, as well, to your employer.

However, even if you have forgotten to submit rent receipts/rent agreement to your employer, then you can claim the benefit at the time of filing of income tax returns. It is advisable to keep proofs of rent paid and rent receipts as the tax department can ask you to provide it to authenticate your claim.

Special cases to claim HRA benefit
1. Rent paid to your parents
If you are staying with your parents and paying rent to them, you will be eligible to claim the tax-exemption on HRA. Experts suggest that it is advisable to have a documented evidence such as rent receipts, financial transactions, rental agreement to avoid rejection of claim by the tax department. There have been instances where the Income Tax department has rejected claims because there was no genuine proof of transactions having taken place.

2. Own a house but staying in a different city
Even if you own a house but are staying in a different city because of your job, then, too, you can claim HRA benefit if you are living in a rented property.

3. When can you not claim HRA exemption
If you are receiving HRA but are staying in our own apartment, then you cannot claim the HRA exemption benefit. The whole HRA amount received will be taxable in your hands.

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The examples used are for Illustration purpose only.
Comment in comments section if you have any queries.

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Examples used are for Illustration purpose only and might not cover every detail of examples shown. It is advised to seek professional help before taking any financial decisions. The owner of this channel shall not be liable in any way.

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