‘Is HRA Taxable?’
Yes, but it is not fully taxable.
HRA is a House Rental Allowance paid to the employees by the employers as accommodation cost to live in the city. According to Income Tax Act, 1961 Section 10 (13A), HRA can be exempted. To get HRA tax exemption, employees need to submit rent payment receipts, and rent agreement.
What is the maximum HRA Claim?HRA is taxable or not, we’ve figured that out, now let us look at the maximum HRA claim. You can only claim the actual HRA received. HRA calculation is done based on the lowest of the following:
Actual HRA received
50% of salary
Excess rent paid over 10% of the annual basic salary
Sudip earns a monthly basic salary of Rs 12,000, receives HRA of Rs 7,000 and pays Rs 7,500 rent for an accommodation in a metro city. The tax rate applicable to the individual is 10 percent of his income.
To avail HRA benefit, the least of the following amount (yearly) is exempted, rest is taxable:
Actual HRA received = Rs 84,000
50% of salary (metro city) = Rs 72,000 (50% of Rs 1,44,000)
- Excess of rent paid annually over 10% of annual salary = Rs. 81,000
It shows that of Rs 84,000 actually received as HRA, Rs 81,000 gets tax exemption and only the balance of Rs 3,000 gets added to the employee's income, on which a tax of Rs 300( 10 per cent slab ) gets payable.
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Authors Of The Question
Is HRA taxable?
Karan
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3 Year
2021-04-30T19:01:35+00:00 2021-04-30T20:31:33+00:00Comment
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