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House Rent Allowance (HRA) Calculator

With the offices again opening up and implementing hybrid working models, house rent is again on the rise. However, if you are living in a rented apartment for your job, you can claim a deduction in your taxable income for the same with the help hra exemption calculator.

So, in this article, we have jotted down all the important aspects of hra exemption and how you can avail of the same while filing your ITR. If you are a salaried employee, HRA can be a good way to save taxes how for the same, you need to know how to do house rent allowance calculation.

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What is an HRA Calculator?

For understanding an HRA calculator, we first need to understand what HRA is and how it works. So, house rent allowance or HRA is a part of your total salary or CTC which the company offers for the accommodation purpose. It is included in the in-hand salary of the employees in most organisations until and unless the company pays the rent directly or arranges accommodation for the employee.

Now there are two sections in the Income Tax Act, which deal with this HRA exemption. One is Section 10 (13A) which is for the employees who are receiving HRA from their employees (it is one of the CTC breakups) and 80GG which is for people who are living in rented houses but don’t get any HRA from their employers. This will be discussed in detail in the next segment of the article.

Coming back to the HRA calculator is an online tool for calculating the amount or portion of HRA that you can avail of as an exemption. Like other financial calculators, this calculator also works when you input certain variables into it and provides you with the result instantly.

Typically the HRA calculator needs you to enter the Basic Salary you receive per month, DA if received, the HRA amount specified, the amount of rent paid every month, and the city of your residence. Once you enter this information in the HRA calculator online, you will get the amount which you can avail as a deduction from your income for ITR filing.

How is the Exemption on HRA Calculated?

Both the sections of the IT Act which deal with the HRA exemption have the same method of calculating the exempted amount. The least of the following is taken into account for deduction from Income Taxes –

  • Actual rent you have paid in a financial year minus 10% of the (basic salary + DA) for the same period.
  • Actual HRA received from the company/ employer
  • 50% of the (Basic +DA) for people living in a metro city while 40% for those who live in another city.
 

Let’s take an example to understand this.

Suppose you are working in Mumbai where you are living in a rented apartment whose rent is Rs. 30000 per month. Your CTC includes Rs. 40000 towards HRA every month. The basic salary is Rs. 1 lakh. So,

Actual Rent – 10% of Basic plus DA
= Rs. [(30000*12) -10% (100000*12)
= Rs. 360000 – 120000 = Rs. 240000

Actual HRA received from the company/ employer = Rs. 40000*12 = Rs. 480000

As you are living in Mumbai, so 50% of Rs. (1 lakh *12) = Rs. 600000

 

The last of these three is Rs. 240000 which you can avail of as an exemption from your income taxes every year.

How is HRA Taxed?

As you can see in the example above, the total amount you receive as HRA is not available for tax exemption. So, the amount left after deducting the exemption is added to your annual income on which you have to pay taxes. In the above example, you receive an annual HRA of Rs. 480000, out of which the exemption you can avail is Rs. 240000, so on the remaining Rs. 240000, you will be paying taxes as per the tax slab you fall into.

How to Use the HRA Calculator?

Using an HRA calculator is super simple. If you take a look at our HRA calculator online you can find how it works. You have to enter certain variables including –

After you enter all these details into the HRA calculator you can click on the calculate button and the calculator will give the result instantly.

How Can an HRA Calculator Help You?

HRA calculation for income tax is one of the crucial steps in evaluating and planning your taxes. With the HRA calculator, you do not have to do the tedious hra calculations manually which can save you a lot of time and effort.

Apart from that, our hra calculator online can give accurate results in seconds which can help you save a lot of taxes.

Even without the help of any CA or other financial professional, you can find out how many deductions you can avail from your HRA.

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Conclusion

So, if you are living in a rented apartment and paying rent for the same, you are eligible for availing of deductions for HRA. Use this HRA calculator to determine how much you can save and simplify your tax planning and evaluation within the blink of an eye.

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FAQs on HRA Calculator

Is the HRA calculator free?

Yes, HRA calculators are completely free online financial tools which are open to all users.

Can I claim a deduction if I am living in my relative’s house?

Yes, you can claim a deduction while living in a relative’s house or even with your parents in their house. However, in these scenarios, the owner of the apartment must produce rent receipts and include the rental income in their ITR.

Is there any ceiling on HRA deduction?

While there is no ceiling on the amount of HRA you can claim as a deduction but if the rent is over and above Rs. 1 lakh in a month, then you need to produce your PAN for verification purposes.

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