This HRA exemption calculator for salaried employees will help you figure out the amount of HRA exemption you want to claim to save income tax.
Using 3 inputs – Basic Pay + DA, HRA amount received and rent you pay, you can easily find out the HRA exemption limit applicable to you to save income tax.
WHAT IS A GAME?
The full form of HRA is House Rent Allowance If you are a salaried employee, you must receive the HRA component. You can confirm this on your payslip for any month. HRA is provided to you to help you pay your rent if you stay in rented accommodation
Not all of us stay in the tenancy, so this HRA amount becomes taxable if you don’t stay in the tenancy
However, if you stay in a rental, you can claim an HRA exemption to reduce your taxable income, helping you save on income tax
There are certain rules that you need to follow along with the HRA calculation formula that you need to use to calculate the HRA exemption as not the entire amount of HRA can be exempted from taxable income.
ONLINE GAME EXCEPTION CALCULATOR
The above HRA exemption calculator for salaried employees will help you calculate the amount of HRA you can claim to save income tax. However, here are a few points you should consider:
HRA calculator will give you accurate results if you provide correct information about your basic components + DA of your salary, amount of HRA received and rent paid by you, all details on annual basis. It does not take into account the change in basic salary or rent components between accounting periods.
If you live in a metro, 50% of basic salary will be considered for calculating your HRA exemption amount, otherwise 40% will be considered in a non-metro city.
This HRA calculator gives you an approximate idea of the approximate amount you can claim as HRA exemption to save income tax.
ALSO READ: Other tax saving options available to taxpayers
HOW THE GAME EXEMPTION IS CALCULATED?
The above HRA exemption calculator for salaried employees can help you calculate the exemption limit easily.
But let’s understand how this calculator works:
The amount you receive as HRA (the full form of HRA is House Rent Allowance) is not fully tax-exempt.
The tax-exempt portion should be at least from the following calculations:
- Actual HRA received from employer
- 50 percent of “salary” if accommodation is in metro cities (Delhi, Mumbai, Chennai, Kolkata), or 40 percent in other cities
- Annual excess rent paid in excess of 10 percent of annual “salary”
where salary means “basic salary + loyalty allowance”
You can only claim the full HRA received in #1 if the number is higher in calculations #2 and #3 above. Let’s understand this with the examples below
CALCULATION FORMULA
Let’s see an example of rent, basic pay and HRA below:
HRA exemption calculator using Excel from FinCalC And below are the calculations based on the above calculation formulas:
HRA Exemption Amount Calculator
Above calculation #2 is minimum out of all 3. So you can claim Rs. 95,400 as HRA and deduct this amount from your taxable income to calculate your income tax using the old tax regime.
Actual rent = Rs. 1,20,000
10% of Basic Pay = 10 * Rs. 2,46,000 / 100
10% of Basic Pay = Rs. 24,600
So the actual rent minus 10% of basic pay becomes Rs. 1,20,000 – Rs. 24,600 = Rs. 95,400
This is how the HRA calculation works.
INCOME TAX SAVINGS BY CLAIMING THE GAME
You can save income tax by claiming the HRA amount (based on the above calculator) if you stay in a rental, only if you choose Old Tax Regime for income tax calculation. HRA exemption is not allowed in the new tax regime as it has reduced the Tax Slab rates.
