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Actual HRA offered by the employer = Rs.(Actual rent paid) – (10% of the basic salary) = Rs.The amount of tax deduction that can be claimed will be the least of the following: The following table shows the salary structure for Mr. Now, let us understand how much tax deduction he can claim on the basis of this allowance.

A, who lives in a rented house, works as a salaried employee in Delhi. NOTE: Salary refers to the sum of basic salary, dearness allowance (DA) and any other commissions, if applicable for the purpose of HRA calculation.

50% of salary when residential house is situated in Mumbai, Delhi, Chennai or Kolkata 40% of salary when residential house is situated elsewhere.

Actual rent paid minus 10% of the basic salary, or.

The amount of tax deduction that can be claimed over HRA is the least of the following: How is House Rent Allowance (HRA) Calculated

You should be actually paying house rent, i.e., the rent receipts should be issued in your name.

You should receive HRA as a salary component.

Who Can Claim Tax Deduction on HRA – Eligibility CriteriaĪ part of HRA can be claimed as a tax deduction according to Section 10(13A) of the Income Tax Act, if the following eligibility criteria are met:

Let us understand the eligibility criteria to claim HRA deduction and its calculation in the following sections. HRA not only helps you manage the expenses incurred on a rented house, but also helps you save on your total tax outgo. It refers to the amount paid by an employer to his/her employee to meet the cost of living in a rented accommodation. The full form of HRA is House Rent Allowance, which often forms a key taxable component of a salary slip.

Section 80GG – How to Save Tax If You Don’t Receive HRA.

Important Points to Remember for Claiming HRA Deduction.

How is Tax Deduction on House Rent Allowance (HRA) Calculated.