House Rent Allowance (HRA) Exemption for salaried and Non Salaried Individuals

 

Hi Friends here we will learn about House rent allowance exemption, in brief.

Also I have shown how to calculate HRA exemption in Excel.

You can download this HRA calculator, the link is given in the description box.

 

Before starting I would like you to subscribe my channel because in future I am going to cover some interesting topic on wages and payroll compliances and a also I will start payroll tutorial.

So ,let us start now ..

Here I have categorized the HRA exemption for Salaried person which cover under section 10(13A) and another is for non-salaried person which is under section 80GG

So yes, here salaried person as well as non-salaried person or who has no HRA component in his or her CTC they all can take benefit of HRA exemption.

Here we will see first for those individuals who has no HRA component in the CTC.

So, taking the benefit of HRA exemption under section 80GG he or she must should follow these conditions.

conditions are.

Ø  You are self or salaried person

Ø  You have not received HRA in that year of claiming

Ø  Do not own any residential accommodation to you and your spouse at place you are associated.

 

Now we will see what is the rules for deduction u/s 80GG

So, there is 3 conditions for exemption u/s 80GG and least of these 3 conditions will be considered for HRA exemptions let us see here.

1.     Rs 5000 PM

2.     25% of Adjusted total income

3.     Actual rent minus – 10% of adjusted total Income

 

Now you will ask what is adjusted total income so adjusted total income means less all the long term and short-term capital gain from total income.

 

Now the 2^nd very important scenario which is for Salaried person.

 

Now we will see first how it is eligible for HRA exemptions

 

Ø  Salaried Individuals, who live in rented house, can claim the House Rent Allowance (HRA)

Ø  The Allowance is for expenses related to rented accommodation

Ø  IF you don’t live in rented accommodation, then it will be fully taxable

 

Now we will see how to Calculate HRA exemption which is for salaried person under section 10(13A).

Again, here there is 3 conditions and least amount of these 3 conditions will be considered for HRA exemption.

Conditions are…

1. Actual HRA Received
2. 50% (Metro City) or 40% (Non-Metro City) of {Basic+DA}
3. Actual Rent paid minus 10% of {Basic+DA}

   Deduction for HRA exemption least of above condition (A,B,C)

   Metro City is - Mumbai,Chennail,Kolkata & Delhi rest is Non-Metro city.

 

Now there is some important notes about HRA exemption which we must should know let see here and after that we will learn to calculate HRA exemption in Ms Excel.

•       PAN number of Landlord is mandatory if you are paying annual rent more than Rs1 Lac.

•       Only salaried person can take HRA Exemption U/s 10(13A)

•       Salaried and non-salaried person both can take HRA benefit u/s 80GG

•       Rent receipt is compulsory for exemption

•       Rent given to spouse is disallowed

•       Paying rents to parents allowed for HRA exemption

 

Now we will learn how to calculate HRA exemption in Ms Excel

As here you can see I have two different excel sheet first sheet for salaried person and 2^nd is for non-salaried person.

In first sheet you can see here I have arranged the data like Month Basic ,DA,HRA,Rent end exemption column for calculations.

In top of the sheet there is location tab where we need to select the Location.

Now we will see the Exemption cell and try to understand here the formula which satisfied the all 3 conditions of Section 10(13)A.

Here you can see fist conditions is Actual HRA received, then 2^nd conditions rent paid minus 10% of basic and thirst conditions is 50 or 40% of basic +da.

And I have started this formula with minimum because we need the least amount for exemptions.

In the same way I have describe this calculation for non-salaried person.

Here you can see the first conditions is there is notional amount of Rs 5000 pm that is 60,000 annually.

Then 2^nd conditions which is 25% of adjusted total income here you can see how I have figure out the adjusted income.

The third and last conditions is Actual rent -10% of adjusted income.

And finally, actual exemptions will be least of following.

Friends you can download this excel format from my blogs which is AdiansHR.

So that’s all for today video please do like subscribe and comment on my video.

Thank You!