HRA EXAMPTION
Shirish
(Querist) 29 November 2010
This query is : Resolved
PLEASE UPLOAD HRA EXAMPTION FORM U/S 10 (13A)
A V Vishal
(Expert) 29 November 2010
The amount of House Rent allowance, which is to be treated as ‘exempt’ from income tax has to be taken as the least of the following amounts:-
(i)Actual HRA Received, or
(ii)Rent paid in excess of 10 of salary, or
(iii)50% of salary if the employee is in Chennai/Mumbai/Kolkatta/Delhi and 40% of salary if the employee is in any other place.
For purpose of deduction of tax, the payment of rent by the employees drawing more than Rs 3,000 as HRA should be verified through rent receipts, though no rent receipt is required for drawal of HRA.
Illustration. – A person in Delhi and drawing Pay Rs. 9,000 p.m., DA Rs. 3,400., CCA Rs 300 p.m and HRA Rs 2,700 p.m. is paying a monthly rent of Rs 3,200 the amount of HRA which can be exempted from Income Tax.
(a) HRA received @ Rs 2,700 p.m. Rs. 32,400 p.a.
(b) Rent paid in excess of 10% of salary, (i.e.,Rs. 3,200 – 900) X 12 Rs. 27,600
(c) 50% of salary, i.e., Rs. 9,000 X 50/100 X 12 Rs. 54,000
Rs. 27,600, which is the least of the three amount, will be exempt.
Important Points about House Rent Allowance
No portion of HRA will be exempt from tax –
(i) If the assessee lives in his own house or in a house for which no rent is paid by him,
(ii) If the actual rent paid by him is equal to or less than 10% of his pay.
In other cases, exemption of HRA received is permissible to the extent admissible by applying the above mentioned formula.
soumitra basu
(Expert) 02 December 2010
In some cases D.A. may have to be consider for the purpose of claiming HRA exemption.
