HRA can be claimed if below conditions are met:
• Assessee is in receipt of HRA
• Pays rent
• Rent paid is more than 10% of salary.
• The exemption shall be calculated on the basis of where the accommodation is situated.
• If the place of employment is the same for the whole year, then exemption shall be calculated for the whole year.
• If there is a change in place during the previous year, then it will be calculated on a monthly basis
• Exemption should be calculated in respect of the period during which rental accommodation is occupied by the employee during the previous year.
• Salary for the period during which rental accommodation is not occupied shall not be considered.
Salary for HRA
= Basic Pay + DA(considered for retirement benefits) + Commission ( if received as a fixed percentage on turnover as per terms of employment)
|Amount received during the financial year for HRA
Less: Exemption u/s 10(13A) Rule 2A Least of the followings:
(a) Actual amount received xxx
(b) 50% (for metro cities) / 40% of Salary (for other places) xxx
(c) Rent paid less 10% of Salary xxx
Other Allowances and related Exemptions:
- Children Education Allowance — Rs.100 p.m. per child restricted upto 2 children
- Children Hostel Expenditure Allowance — Rs. 300 p.m per child restricted upto 2 children
- Running Allowance ( for transport sector — Lease of :
employees for meeting personal expenditure (a) 70% of the amount received, or
incurred during transport from one place to another) (b) Rs.10,000 p.m
- Transport allowance (given to meet the — Rs. 800 p.m and in case of handicapped or
employee’s expenditure for travelling from his resident blind Rs. 1,600 pm.
(in to office and back)