This PPT will help you in understanding the concept of HRA in detailed manner. It includes all the provisions of Income Tax including the calculation part.Subscribe to our channel for more such videos.

1. House Rent Allowance (HRA)
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3. This document covers pointers about
House Rent Allowance (HRA)
What will we cover?
● Definition
● Income Tax Exemption
● Rules & Regulations
● How to claim
● Example
● Joint Family / No HRA ?
● Calculator
Let’s discuss !
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Overview

4. ● Salaried individuals, who
live in rented houses, can
claim the House Rent
Allowance (HRA) to lower
their taxes – partially or
wholly
● The decision of how much
HRA needs to be paid is
made by the employer
● House is a type of
allowance
● The purpose of this
allowance is to meet the
cost of living in a rented
accommodation
HRA Definition
House + Rent + Allowance

5. Code on Wages 19
● HRA is in list of excluded
allowances
● Is not part of wages
● Ceiling on allowances is 50%
of wages, anything above
will become part of wages.
Income Tax Act
● Exemption limit of 50% of
[basic salary + DA] for
those living in metro cities
(40% for non-metros)
● Only defines exemption
limit
How much HRA?
Different Laws, Different Definition

6. Employee State Insurance Act
● HRA is part of ESI wages
● ESI is deducted till ceiling
limit
How much HRA?
Different Laws, Different Definition
Provident Fund Act
● HRA explicitly is not form
part of “Basic Wage”
● Does not define the % of
salary permissible
● EPF amendment bill
incorporates, definition of
wage same as code on
wages

7. Following are conditions to claim HRA
● Salaried individual (self-employed individuals cannot claim HRA)
● Stay in a rented accommodation, Not living in self owned house
● Rent exceeds 10 percent of your salary
● HRA is part of salary
● Not paying rent to spouse
Conditions for HRA Exemption
House + Rent + Allowance

8. How Much Deduction?
2
50% of [basic salary +
DA] for those living in
metro cities (40% for
non-metros)
3
Actual rent paid less
10% of basic salary +
DA
The deduction available is the least of the following amounts
1
Actual HRA Received

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10. Example
Particulars Case 1 Case 2 Case 3
Basic + DA ( Per Annum ) ₹300,000.00 ₹300,000.00 ₹270,000.00
HRA ( Per Annum ) ₹100,000.00 ₹100,000.00 ₹130,000.00
Rent Paid ( Per Annum ) ₹120,000.00 ₹200,000.00 ₹200,000.00
1. Actual HRA received; ₹100,000.00 ₹100,000.00 ₹130,000.00
2. 50% of [basic + DA] for metro cities 40%
for non-metros)* ₹150,000.00 ₹150,000.00 ₹135,000.00
3.. Actual rent paid less - (10% of basic
salary + DA) ₹90,000.00 ₹170,000.00 ₹173,000.00
Exempt HRA ( loweds of 1,2,3 ) ₹90,000.00 ₹100,000.00 ₹130,000.00
*Let's take Delhi as work place, metro - Calculator at end of the slides

11. ● If the annual rent of your accommodation exceeds Rs.1,00,000,
then presenting the landlord's PAN card is mandatory to claim
TDS Benefit.
● In case the landlord does not have a PAN card, he/she can
provide a self-declaration. (circular No. 8/2013 - 10 Oct’13)
● Individuals or HUFs paying monthly rent to a resident in excess
of Rs. 50,000 are liable to deduct TDS @5% ( u/s 194-IB )
● If the Landlord is a non-resident, 30% TDS to be deducted
More info on TDS - www.tin-nsdl.com
Paying Rent?
Things to remember

12. Who can claim benefit under section 80GG?
● Self-employed or salaried
● Not received HRA during FY
● Spouse or minor child or HUF – do not own any residential
accommodation at the place of residence,
The deduction u/s 80GG is least of the following :
● Total rent paid minus 10% of adjusted total income
● Rs 60,000 per year or Rs 5,000 per month
● 25% of the adjusted gross total income
Are you a Pakodewala?
No HRA? No worry - Section 80GG hai na!

13. Mandeep works at LLA. We provides him HRA, He is a sanskari balak
& lives with parents in their house, not in rented accommodation.
Can he claim HRA benefit?
● Mandeep need to form a rent agreement with parents
● He can pay rent to parents and claim benefit
● He need to transfer money in their account
● Parents have to show that income as rental income in tax filing
If parents are retired / not earning can save a lot in taxes
Joint Family?
No worry - Parents hai na!

14. HRA exemption and Home Loan
Exemption, can both be claimed?
● YES
Two rented houses in two
locations?
● Only one house
Sawal-Jawab !
Jo jyada sochte hai,
Rent Receipt Needed?
● YES, Above 5000/ month
Exemption includes electricity /
maintenance charges?
● NO
Can I cheat the system?
● NO, form 16(B)

15. Official HRA Calculator
https://www.incometaxindia.gov.in/Pages/tools/house-rent-allowance-calculator.aspx

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