HRA is a part of your salary only. Under this, you can do tax savings through house rent. Let us tell you how you can get tax benefit from this and how it is calculated.
There is time till 31 July for ITR filing. You should file your income tax return in time. But before filing ITR, it is very important to know about it well. You can save tax in many ways. HRA is one of them. HRA is a part of your salary only. Under this, you can do tax savings through house rent. Let us tell you how you can get tax benefit from this and how it is calculated.
What is HRA?
HRA is a special tax saving provision under section 10(13A) of the IT Act. The purpose of HRA is to reduce the expenditure on housing. Deduction can be taken as rent. HRA varies from city to city. Its contribution is more in metro cities. This reduces the tax liability. Let us know how to calculate it.
How is HRA calculated?
Suppose you work in Delhi NCR and your basic salary is Rs.40,000. Means your annual salary is Rs.4,80,000. Now out of this you get Rs 11,000 as HRA. If you spend Rs 14,000 for living, then you can take the benefit of HRA exemption amount.
This is the calculation
HRA amount Rs 11,000 x 12 = Rs 1,32,000 50% of basic salary (in metro cities), i.e. 50% of Rs 4,80,000 = Rs 2,40,000 Actual rent of your house, minus 10% of basic salary 1,68,000 (14,000 x 12) (subtract) Rs 48,000 (10% of Rs 4,80,000) = Rs 1,20,000
Now according to this calculation, you are eligible for HRA exemption of the lowest amount of 1,20,000.
