How to calculate HRA rebate, so you can save thousands of rupees in income tax


New Delhi:

Almost all working people find it difficult to file income tax return (Income Tax Return or ITR) in the middle of the year or to submit the declaration of savings made during the year to the office as soon as the financial year begins. This is because most of the people do not understand all these things closely, when the reality is that if one declares the savings properly, he can not only save on income tax, but also save on the initial savings. Due to this planning one can better plan the expenses of the entire year.

One of the many such declarations regarding savings is made by people who live in rented houses, and who are given HRA, i.e. House Rent Allowance, as part of their salary. This HRA, i.e. House Rent Allowance, can actually help working people who want to settle down in a rented house while dreaming of owning their own house, can actually save a lot of income tax, so it is very important that it is disclosed. Go the right way at the right time. But the problem is that many salaried people do not know how to calculate HRA rebate, and also do not know how to get it, so today we have written this news to help you.

Who will get HRA rebate and how…?

To get HRA rebate, one should first understand who can get HRA rebate in income tax. So, remember, the two most important things for this are the amount you are given in the form of HRA (House Rent Allowance) as one item of your salary, and the other thing is the house rent you claim to pay. If you are, it shouldn’t be your name. Under Section 10 (13A) of the Income Tax Act, any salaried person must pay – 50% of his basic salary, i.e. the amount received as HRA, or the amount actually exempted by him from the amount of rent paid on the amount of basic salary. After deducting 10% – the smallest of the three amounts.

How Much HRA Rebate Who Can Get…?

To understand this in detail, we have created this chart. This PDF chart gives an example of six employed people earning a basic salary of ₹25,000, ₹50,000, ₹50,000, ₹50,000, ₹75,000 and ₹1,00,000 respectively. These people are given 50 percent of their basic salary as HRA every month, and they pay ₹12,500, ₹20,000, ₹25,000, ₹30,000, ₹40,000 and ₹45,000 as rent every month respectively.

How to calculate HRA Rebate i.e. Exemption on House Rent from Income Tax by Discretion on Scribd

Now understand – the first person who gets a basic salary of ₹25,000 gets ₹12,500 as HRA, and he pays only ₹12,500 per month as rent to the landlord, then 50 percent of this person’s basic salary is ₹12,500, he gets ₹12,500. After deducting HRA, and 10% of basic salary from the actual rent paid by him, the amount comes to ₹10,000. Now the smallest of these three amounts is ₹10,000, so as per rules this person will get HRA rebate on an amount of ₹10,000 per month or ₹1,20,000 per year, ie ₹1 of his taxable income. 20,000 the person will be reduced, and on this amount he can save a maximum of ₹ 37,400 (if the person pays tax in the 30 per cent slab, and this amount also includes 4 per cent cess).

Similarly, the second person in the chart gets ₹50,000 as basic salary and ₹25,000 as HRA. This person pays ₹20,000 per month as rent. So, this person’s basic salary is 50 percent, i.e. ₹25,000 after deducting ₹25,000 received as HRA and half of the rent, the amount comes to ₹15,000. Now for this person, the smallest of these three amounts is ₹15,000, so he will get an HRA rebate of ₹15,000 per month or ₹1,80,000 per annum. In this way, this person can save a maximum of ₹56,160 including income tax and cess.

The individuals in the third and fourth examples get only ₹50,000 as basic salary and ₹25,000 as HRA, but pay ₹25,000 and ₹30,000 as rent per month respectively. Now the HRA that both will get will be 50 percent of their basic salary and will be only ₹25,000, but after deducting 10 percent of the basic salary from the rent paid, the amount they will get will be ₹20,000 and ₹25,000 respectively. . Based on this, the HRA rebate they will get annually will also be ₹2,40,000 and ₹3,00,000 respectively, on which they can save a maximum of ₹74,880 and ₹93,600 respectively in annual income tax.

The fifth person in the chart got ₹75,000 as basic pay and gets ₹37,500 as HRA. This person pays ₹40,000 per month as rent. Now half of this person’s basic salary becomes ₹37,500, HRA gets ₹37,500, and after deducting 10% of basic salary from the rental amount, he gets ₹32,500, so he can get HRA rebate on ₹32,500 or ₹3, per month. 90,000 per year based on which he can save a maximum of ₹1,21,680 in income tax.

The last example is of a person whose basic salary is ₹1,00,000 per month, gets ₹50,000 as HRA, and pays ₹45,000 as house rent. Now this person will have three amounts – ₹50,000, ₹50,000 and ₹35,000. So, by taking HRA rebate on the smallest of these three amounts, i.e. ₹ 35,000 per month or ₹ 4,20,000 per annum, he can save a maximum of ₹ 1,31,040 in income tax.

Remember important things…

By the way, one more thing should be remembered by those who want to get HRA rebate. If you pay a house rent of more than ₹1,00,000 per annum (i.e. ₹8,333 per month), you must also enter the PAN number of your landlord (whether they are your parents or spouse), and The landlord has to pay income tax on this rental income. And yes, don’t forget – to get HRA rebate, you should also have house rent receipts, which you have to submit to the office.


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