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If a person is doing job in Government/ Public/ Private Sector and getting House Rent Allowance(HRA) as a part of is/ er salar!

along wit ot erallowance" t en e/s e could claim e#emption of House Rent Allowance from is Gross $a#able Income as provided b! t e Income $a# %epartment& 'ut t e e#emption is restricted onl! for t ose persons w o are not living in t eir own ouse i&e t e person s ould be living in a Rented Accommodation& House Rent allowance (HRA) e#emption calculation is most easiest calculationin income ta#& Here is a set of (A) on HRA e#emption calculation and ope it will definitel! elpful for man! to understand t e topic in simple wa!& HRA e#emption calculation is made basicall! on four variable i&e& House rent allowance received" House rent paid" Salar! Received and *ocation of t e ouse& As per section 10(13A) read with rule 2A , least of the following three will be exempted +& House Rent Allowance (HRA) received& ,& -./ of salar! in case of residential accommodation ta0en on rent is situated in 'omba!" 1alcutta" %el i" or 2adras (1 ennai) and 3. / of salar! in in an! ot er case& 4& Rent paid in e#cess of +. / of Salar!&

FAQ s regarding exemption of !ouse "ent Allowance (!"A) Q# !ow to calculate !"A exemption i#e in monthl$ or $earl$ mode% Ans& HRA e#emption calculation is depended on four variable as s own above" if all of t ese remains same in a !ear t en !ou can calculated it on !earl! basis ot erwise for eac set of of variable" !ou ave to do separate calculation& If %A is c anged t en !our e#emption of HRA will also effect& Q# I ave received salar! arrears of last !ears& (or HRA e#emption arrears is to be included or not5 Ans & (or HRA e#emption "salar! of t e relevant period for w ic we are calculating e#emption is to be ta0en &so arrears are not be included for HRA purposes &salar! on due basis is to be ta0en& Q# As per Si#t Pa! commission "Grade pa! for 1alculation of HRA e#emption 5 Ans& As per si#t pa! commission 'asic pa! 6 Pa! in pa! band plus Grade Pa! so according to 7t 1P1 Grade Pa! is part of 'asic Pa! and 'asic Pa! !ou are referring is actuall! pa! in pa! band & In brief Grade Pa! is to be included for salar! as per HRA e#emption calculation& Q# I am a %octor and receiving 8PA (non practice allowance) and it is also considered in most of t e retirement benefits & Is 8PA to be included in salar! for HRA e#emption 5 Ans#8o" it is not& As per section +.(+4A) onl! %A is to be included in t e salar! for HRA e#emptioncalculation& Q#$o claim HRA e#emption "m! %%9 is as0ing for Rent pa!ment receipt from m! landlord &w at s ould I do5 Ans& Give im "w at e as0ing for &!es produce t e ouse rent pa!ment receipt to im&Actuall! %%9(drawing and disbursing officer) is responsible to deduct $%S from salar! "so to avoid penalties at later stage " e as to as been added in 'asic Pa! "w et er it is part of salar!

verif! all t e saving proofs "rent receipt etc from t e emplo!ee&and if emplo!ee is unable to produce t e same t en %%9 is empowered to reject t e claim of t e emplo!ee& Q# Is it necessar! to give *andlord:s PA8 number on rent receipt 5 Ans& *andlord:s PA8 is mandator! if pa!ment e#ceeds more t an Rs +".."... per annum w&e&f& financial !ear ,.+4;+3& *andlord PA8 is mandator! if rent paid is in e#cess of Rs +<..../; for (inancial =ear ,.++;+, > +,; +4) Q# 2! friend ave informed me t at t ere is a cut off amount for rent paid after w ic re?uired&Is it true5 onl!" rent receiptis

Ans& =es and 8o &=es because t ere is a cut off *imit &8o because t e cut off limit is for HRA received P2 and not for House rent paid&$ ose emplo!ees "w o are receiving ouse rent up to 4... per mont are not re?uired to submit Rent receipt to %%9&I repeat t is 4.../; limit is for ouse rent received and House rent paid in t is case ma! be more t an 4.../;& Q# I ave produce rent receipt to m! %%9 but e is now as0ing for rent agreement 5 Ans& Rent receipt is enoug to claim t e HRA e#emption " and I re?uest to !our %%9" please do not as0 for rent agreement & 9n t e reverse" if emplo!ee as submitted a rent agreement onl! t en %%9 s ould as0 for rent receipt as t e rent agreement is not a proof of pa!ment& Q# 2! %%9 /emplo!er as rejected m! HRA e#emption and deducted t e ta# accordingl!& (urt er not ing as been mentioned about HRA e#emption in (orm +7 issued b! t e emplo!er& 1an I claimHRA e#emption w ile filing m! Income ta# return5 Ans& =es " !ou can claim t e HRA e#emption& If emplo!er as not considered !our HRA e#emptionclaim t en !ou can claim t e same w ile filing !our income ta# return even not ing as been mentioned about HRA/HRA e#emption in (orm +7& Q# I ave paid rent to m! @ife/(at er& 1an I claim HRA e#emption5 Ans& If t is is actual pa!ment t en =es !ou can claim rent e#emption even if t e rent is being paid to !our famil! members& 'ut remember House must be on t eir name or e/s e must be aut oriAe to receive rent on t e propert!& $ oug t e above point ave no relation wit HRA e#emption but ta# planning s ould be done carefull! and remain wit in limit & Q# &'ot of us ( usband /wife) are wor0ing and leaving in same e#emption 5 AnsB =es" but subject to t at rent is s ared/paid b! bot e#emption up to s are of rent paid actuall! paid b! !ou& ouse on rent &1an we bot claimHRA

of !ou and individuall!" bot

of !ou can claim

Q# I am claiming HRA for t ree mont s and moving to own residence after t at& @ en t e HRA is calculated" will it ta0e into consideration t e basic for t ree mont s or basic pa! for entire !ear5 i&e&" will t e calculation be 6 Actual rent ; +./ of annual basic or Actual rent ; +./ of t ree mont basic 5

AnsB 1alculate salar! > House rent paid mont to mont basis and t en calculate full !ear !ear e#emption b! aggregating all mont in !our case e#ercise is re?uired to be done for t ree mont s onl!& Q# 1an I get HRA e#emption and interest of House loan and principal amount bot t e amounts" if i am not sta!ing in m! own ouse because it is in ot er cit! Ans B=es" !ou can claim bot HRA > House loan interest if !ou are sta!ing at ot er place due to emplo!ment& Q# I am pa!ing rent for ouse at %el i w ere m! famil! is living and also pa!ing rent for accommodation in anot er cit! w ere I am emplo!ed& 1an I claim HRA e#emption for total rent paid b! me for bot t e accommodation5 Ans& As per rule ,A " rent paid is to be considered for onl! one ouse in w ic assessee is residing and pa!ing t e rent & So !ou can claim rent for onl! w ere !ou are residing " not on ouse in w ic famil! is living Q# @ at if I ave a ouse in m! name " and anot er ouse joined to m! ouse in mot er name can I get HRA benefit if I pa! rent to m! mot er 5 Ans& =ou can claim HRA onl! if !ou ave actuall! paid it " in t is case also" as !ou ave paid rent to !our mot er" t en !ou can claim HRA e#emption benefit& (urt er if !ou s ow House rent pa!ment and claim HRA e#emption t en !our own ouse will be deemed to be let out and !ou ave to add rent in !our income for t at ouse&so on one side !our income will be reduced b! HRA e#emption "on t e ot er side !ou ave pa! ta# on deemed rent for ouse owned b! !ou& 9verall no benefit in doing t is& Q# I ave been ta0en a House 'uilding *oan and m! ouse e is under construction& I am pa!ing +,... as C2I& 1an I ta0e HRA e#emption5 Ans& =ou can 1laim HRA benefit till !our ouse completed subject to t at !ou ave actuall! paid t e Rent & (urt er in future also" !ou can continue to claim HRA benefit" if !our ouse is at a location" ot er t an w ere !ou are emplo!ed or !ou will give ouse for a rent & 2oreover !ou can claim House loan benefit in (inancial =ear ,..D;+. onl! if !our ouse is completed b! 4+st marc " ,.+.& =ou can add more ere t roug comments relevant section of t e income ta# is reproduced ere under section +.(+4A) an! special allowance specificall! granted to an assessee b! is emplo!er to meet e#penditure actuall! incurred on pa!ment of rent (b! w atever name called) in respect of residential accommodation occupied b! t e assessee" to suc e#tent as ma! be prescribed aving regard to t e area or place in w ic suc accommodation is situate and ot er relevant considerations C#planation&E(or t e removal of doubts" it is ereb! declared t at not ing contained in t is clause s all appl! in a case w ere ; (a) t e residential accommodation occupied b! t e assessee is owned b! im F or (b) t e assessee as not actuall! incurred e#penditure on pa!ment of rent (b! w atever name called) in respect of t e residential accommodation occupied b! im& Rule ,A as per Income $a# Rules(*imits for t e purposes of section +.(+4A))& ,A& $ e amount w ic is not to be included in t e total income of an assessee in respect of t e special allowance referred to in clause (+4A) of section +. s all be

(a) t e actual amount of suc allowance received b! t e assessee in respect of t e relevant periodF or (b) t e amount b! w ic t e e#penditure actuall! incurred b! t e assessee in pa!ment of rent in respect of residential accommodation occupied b! im e#ceeds one;tent of t e amount of salar! due to t e assessee in respect of t e relevant periodF or (c) an amount e?ual to (i) w ere suc accommodation is situate at 'omba!" 1alcutta" %el i or 2adras" one; alf of t e amount of salar! due to t e assessee in respect of t e relevant periodF and (ii) w ere suc accommodation is situate at an! ot er place" two;fift assessee in respect of t e relevant period" (d) GHHHI w ic ever is t e least& C#planation B In t is rule (i) salar! s all ave t e meaning assigned to it in clause ( ) of rule , of Part A of t e (ourt Sc eduleF (ii) relevant period means t e period during w ic during t e previous !ear& (iii) GHHHI t e said accommodation was occupied b! t e assessee of t e amount of salar! due to t e