House Rent Allowance (HRA) is an amount that employees receive from their employers as a part of their total monthly income. In case you stay in a rented apartment, your HRA will allow you to claim tax exemption on your annual rent. However, it’s not easy to calculate such tax benefits manually. This page will provide you with the details of an HRA exemption calculator.
Keep reading to know everything about this tool!
An HRA exemption calculator refers to an online financial tool that enables the computation of the amount of tax benefit per annum on your house rent allowance in accordance with the Income Tax Act, 1961. It gives you accurate results within seconds and simplifies the tedious calculation procedure.
Income Tax Rule 2A offers an easy way to calculate HRA exemption. As per this rule, the least amount from the following is eligible for tax exemption from a salaried individual’s income under Section 10(13A):
Let’s say Mr. Singh lives in Bangalore, where the monthly rent is Rs. 25,000. His monthly HRA is Rs. 10,000, while his basic salary amounts to Rs. 40,000 per month.
Now, let’s compute the different HRA provisions for this case:
Since the minimum amount will be applicable, it is clear that Mr. Singh will get an HRA exemption of Rs. 1,20,000 for the relevant fiscal year.
Isn’t this manual calculation time-consuming? To get the result faster, you can access a hassle-free HRA exemption calculator online.
Follow these steps to estimate your annual HRA benefits:
After following the steps mentioned above, you will know how much tax benefit you can avail of while filing your income tax returns. Keep in mind that on certain web pages, an HRA exemption calculator will be in the form of sliders (not fields). Nonetheless, the functionality stays the same.
Wondering why you should use this tool instead of calculating manually? Here’re the reasons why using an HRA exemption calculator is beneficial:
You must know the following eligibility requirements before availing HRA exemptions:
An HRA exemption calculator simplifies the procedure of determining HRA exemptions for a specific financial year; it takes into account your income, place of work, and more. So, don’t forget to access this tool before filing your tax returns.
Ans: You must submit your rent payment receipts for the previous year. In case you do not have your receipts, you can justify your rent payments using bank account statements. If you pay above Rs. 8334 (or above Rs. 1 lakh annually) as monthly rent, you need to provide your owner’s PAN details as well.
Ans: If the need arises, an individual can rent more than 1 property. However, only one of those properties will be eligible for HRA benefits. An increase in the number of rented apartments doesn’t mean you will be saving more tax.
Ans: An individual can opt for HRA benefits without rent receipts only when his/her apartment’s monthly rent is equal to or less than Rs. 3,000. It is mandatory to provide your rent receipts for higher rents.
Ans: Yes, you can claim HRA benefits while staying in your parent’s house. To be eligible for this exemption, you will have to pay a monthly rent to your parents. While filing your tax returns at the year-end, you need to furnish your rent receipts.
Ans: Yes, a homeowner can avail of HRA exemptions coupled with tax benefits on house loan principal and interest payments under these two cases:
You stay in a different city, i.e., your owned property is located elsewhere.
You have rented out your owned property but don’t get the said rent (your family member can receive this payment on your behalf).
This article is solely for educational purposes. Navi doesn't take any responsibility for the information or claims made in the blog.
What is Form 26QB for TDS? How to Download and Submit it?While purchasing a property, buyers are liable to pay various taxes. The Finance Act, 2013 made TDS... Read More »
PF Withdrawal Rules 2023 – Rules, Documents Required and TypesEPF/PF Withdrawal Employees’ Provident Fund (abbreviated as EPF) is a popular retirement sav... Read More »
Stamp Duty and Property Registration Charges in Delhi 2023It is compulsory for property buyers in the Capital to pay stamp duty in Delhi during property regi... Read More »
Income Tax Return – Documents, Forms and How to File ITR Online AY 2023-24In India, it is mandatory for all taxpayers who earn more than the basic tax exemption limit to fil... Read More »
What is Section 80CCD – Deductions for National Pension Scheme and Atal Pension YojanaThe Income Tax Act provides a number of deductions and tax benefits to taxpayers, so they can strat... Read More »
Tax on Dividend Income: Sources, Tax Rate and TDS on dividend incomeWhat are Dividends? Companies may raise funds for running their operations by selling equity. Th... Read More »
Section 112A of Income Tax Act: Taxation on Long-Term Capital GainsWhat is Section 112A? Section 112A of the Income Tax Act was announced in Budget 2018 to replace... Read More »
Section 206AB of Income Tax Act: Eligibility And TDS RateSection 206AB was introduced in the Finance Bill 2021 as a new provision pertaining to higher deduc... Read More »
What is a Credit Note in GST – Example, Format and StepsA GST Credit Note is mandatory for any GST-registered supplier of goods or services. As a supplier,... Read More »
Exemptions and Deductions Under Section 10 of Income Tax ActWhat Is Section 10 of the Income Tax Act? Section 10 of the Income Tax Act, 1961 provides tax-sa... Read More »
Section 57 of the Income-tax Act – Income from Other SourcesIt is quite likely that many entities - individuals as well as businesses - have multiple sources o... Read More »
What is Dearness Allowance? – Types, Calculation, and Current RateWhat is Dearness Allowance? Dearness Allowance Meaning - Dearness Allowance (DA) is an allowance... Read More »
Top 10 Chit Fund Schemes in India in 2023Chit funds are one of the most popular return-generating saving schemes in India. It is a financial... Read More »
10 Best Gold ETFs in India to Invest in April 2023Gold ETFs or Gold Exchange Traded Funds are passively managed funds that track the price of physica... Read More »
10 Best Demat Accounts in India for Beginners in 2023Creation of Demat accounts revolutionised the way trades were conducted at the stock exchanges. It... Read More »
20 Best Index Funds to Invest in India in April 2023What is an Index Fund? An index fund is a type of mutual fund or exchange-traded fund (ETF) that... Read More »
Best Arbitrage Mutual Funds to Invest in India in April 2023Arbitrage funds are hybrid mutual fund schemes that aim to make low-risk profits by buying and sell... Read More »
10 Best SIP Plans in India to Invest in April 2023What is SIP? SIP or Systematic Investment Plan is a method of investing a fixed amount in ... Read More »
10 Best Corporate Bond Funds in India to Invest in April 2023Corporate bond funds are debt funds that invest at least 80% of the investment corpus in companies ... Read More »
10 Best Bank for Savings Account in India [Highest Interest Rate 2023]Savings account is a type of financial instrument offered by several banks. It lets you safely depo... Read More »