At the same time, under the new tax regime, the tax exemption limit has also been increased. Even after increasing the tax limit, if your income is coming in the tax category, then you can save tax by making multiple claims under the old tax system. You can also save tax by claiming house rent allowance under the old tax regime.

What is HRA?

House Rent Allowance is a type of allowance, which is given by an employer to its employee in lieu of payment of house rent expenses. HRA is included as a component of the salary of the employee. According to Rule 2A of the Income Tax Act, the benefit of HRA exemption is given to salaried people under section 10(13A). This exemption is not given under the new tax regime.

Know how to get benefit?

Let us tell that a person gets the benefit of HRA only if he chooses the old tax regime. If you choose the new tax regime, then you will not get the benefit of HRA. In such a situation, if you want to take advantage of the tax exemption available under HRA, then you will have to choose the old tax regime. Keep in mind, if the person receiving house rent allowance is living in his own house, then he does not get the benefit of HRA exemption and this entire amount comes under the tax net.

How to calculate tax exemption on HRA?

– 50 percent of basic pay plus DA for those living in metro cities

– 50% of basic pay plus DA for those living in non-metro cities

Actual rent paid less than 10% of basic pay plus DA

Related Article

The post HRA Exemption Rules: Know what are the tax exemption rules for claiming HRA? first appeared on Rightsofemployees.com.

Even after increasing the tax limit, if your income is coming in the tax category, then you can save tax by making multiple claims under the old tax system. You can also save tax by claiming house rent allowance under the old tax regime.

It is important to understand how much tax salaried individuals can save on House Rent Allowance (HRA) and the rules for claiming it.

What is HRA

House Rent Allowance (HRA) is an allowance given by a company to an employee in lieu of payment of house rent expenses. HRA is included in the salary component that the company gives to the employee. An employee drawing salary under regulation number 2A of the Income Tax Act is eligible for HRA exemption under section 10(13A) of the Income Tax Act. This exemption is not given under the new tax regime.

Calculating Tax Exemption on HRA

50% of Basic Pay + DA for metro cities
40% of Basic Pay + DA for non-metro cities
Actual rent paid is less than 10% of Basic Pay + DA

What are the benefits of HRA

Those people who do not live in their own house and live in a rented house are benefited through HRA. For HRA i.e. House Rent Allowance, people have to give information to their employer after which they can claim HRA.

The post HRA Tax Calculation Rules! These are the tax exemption rules for claiming HRA, if you do not know then know first appeared on Rightsofemployees.com.