Did you know you can get tax benefit on paying rent. This presentation explains what is HRA and how you can claim it to save tax. To calculate HRA exemption: https://tax2win.in/tax-tools/hra-calculator To know more about HRA: https://blog.tax2win.in/hra/

1. HOUSE RENT ALLOWANCE
HRA is an important component of salary and understanding it
properly is paramount for saving tax for salaried individuals.

2. NWR
House Rent Allowance (HRA) is an allowance given by employer to
employee to meet the expenses of rented house.
The amount received is partly exempted from tax.
In case the employee lives in his/her own house and does not pay any
rent, the entire amount would be taxable.
What is HRA?

3. Major Concerns:
• “Can I claim HRA, if I already own a house?”
• “Will I get benefits of home loan deduction, if I am receiving HRA?”
Let us clarify these concerns.

4. • If you’re living in your parent’s house, you
can claim HRA exemption by paying rent
to your parents. In this case, your parents
need to show that rental income received
from you in their income tax return as
their income.
• You can claim both deduction for interest
of your house loan and exemption for HRA
if you’re living in a rented house and not in
your own house.

5. You should be a
salaried employee.
You should receive
HRA as a part of your
salary package/CTC.
You should live in a
rented
accommodation
Information to the
employer by way of
submission of rent
receipts.
Still,Exemption can be
claimed if you forgot to
inform employer at the
time of filing Return.
1 2 3
4 5
CONDITIONS FOR CLAIMING HRA

6. HOW HRA IS CALCULATED FOR TAX SAVING
The least of the following is exempt from tax:
● House Rent Allowance received from employer.
● Excess rent paid over 10% of salary.
● An amount equal to 40% of salary (50% of salary in case of Mumbai,
Kolkata, Delhi or Chennai).
Salary shall mean the Basic Salary + Dearness Allowance +
Commission/Incentive based on a fixed percentage of turnover

7. Now let us understand this with the help of following example:
Mr. X earns a basic salary of Rs 60,000 per month. He lives in Mumbai and pays monthly rent
of Rs 25,000 . The actual HRA he gets is Rs 20,000 per month. His HRA deduction will be the
least of the following three figures:
* Actual HRA received, that is, Rs.2,40,000 (20,000*12)
* Half of the salary, that is, Rs 3,60,000 (60000*12*50%)
* Excess rent paid over 10 per cent of the salary, that is, Rs.2,28,000
(Rent Paid(25000*12=300000)-10%of salary(60000*12*10%=72000)
Therefore, the HRA deduction for Mr.X would be Rs 2,28,000 and so, the taxable component
of HRA would be Rs 12,000 .

8. POINTS TO REMEMBER FOR HRA EXEMPTION:
• If employee receives HRA in excess of Rs.3000/- per
month, it is mandatory to provide Rent receipts to
employer as a proof of rent paid for claiming HRA.
❏ If the annual rent paid exceeds Rs.1,00,000/- it is
mandatory to report PAN of the landlord to claim HRA
exemption. In case landlord does not have PAN, a
declaration of landlord is required.

9. Thank You!
For more Info. log-on to: www.tax2win.in