House Rent Allowance (HRA)

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.

Very Important:

• 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)

Taxable HRA:

Particulars      Amount
Amount received during the financial year for HRA           xxx

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

Taxable HRA          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)




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