How to get an HRA tax exemption if you work from home? Advantage of HRA income tax for WFH

For employees, the rental allowance tax exemption (HRA) is a significant advantage. The HRA comes through a portion of the payroll and can be claimed through resident employees. 

But in fiscal 2020-21, there are some employees, mostly young people, who live far from the place where they rent and work from home with their parents. But now those same workers are baffled that if they can benefit from HRA even if they live with their parents while working from home, and if they can, how is that possible? The questions are briefly discussed within the article. But first, let us know who is responsible for the HRA and what the calculation method is.

Download Automatic Income Tax Revised Form 16 Part A&B and Part B for the F.Y.2021-22[This Excel Utility can prepare One by One Form 16 Part A&B and Part B]

Who gets HRA and what is the method of calculating it?

HRA is available to employees and provides a portion of the salary. Employees living in rent should be entitled to full or partial tax relief on the amount received from HRA. But workers living in rent are not exempt from the tax and workers are required to pay the full amount of the tax to HRA. one of the circumstances must be necessary to qualify for the HRA benefit.

 

You can take advantage of the HRA tax credit when an employee submits the rent. This shows that the HRA tax benefit cannot be used if the rent is not presented.

Download Automatic Income Tax Revised Form 16 Part B for theF.Y.2021-22 [This Excel Utility can prepare One by One Form 16 Part B]

 

Home rental allowance (HRA) calculation

The tax credit in lieu of HRA is available on the lesser of the following amounts:

• Real HRA received through an employee

• 50% of the salary (base + DA) for employees residing in metropolitan areas. And 40% base + DA for non-metropolitan employees.

• Real rent with furniture minus 10% of the salary (Base + DA)

Download Automatic Income Tax House Rent Exemption Calculator U/s 10(13A) in Excel

For employees who live with their parents while working from home, there is no HRA tax credit if they have not paid their rent. But this benefit must be claimed through the people who presented the rent to the parents. 

No HRA benefits unless the rent is registered

If someone has filed for rent with their guardians, they must appear as rental income on their tax return. Their lease must be implemented and presented as proof of payment.

The submission period is currently active for the fiscal year 2020-21, however, the latest extension is until December 31, 2021.

Download and prepare at a time 50 Employees Form 16 Part B for the F.Y.2021-22 in Excel

On March 02, 2022 by www.taxexcel.net

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Do you get HRA as part your salary? If yes, then it’s critical for you to understand how the HRA exemption amount is calculated? How to calculate HRA? And various other things related to housing rent allowance.

On August 31, 2017 by www.taxexcel.net

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On July 18, 2017 by www.taxexcel.net

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Calculation and Taxability of House Rent Allowance (HRA). Today  we are Providing a Premium guide on Calculation and Taxability of House Rent Allowance (HRA). Now you can Find  Best Notes For Calculation of House Rent Allowance. House Rent Allowance [Section 10(13A) & Rule 2A] Calculation and Tax Liability. How To Compute House Rent Allowance. We are Providing Full Computation for Calculation of House Rent Allowance for 2014-15. Now You can Scroll Down Below And See Full guide on Calculation and Taxability of House Rent Allowance (HRA), House Rent Allowance ( HRA) Calculate in India, New House Rent allowance Exemption Rule, How Much House Rent Allowance is Exempt, House Rent Allowance Exemption Calculator, House Rent Allowance ( HRA) Rules and Tax Exemption, House Rent Allowance Act, House Rent Allowance Meaning, House Rent Allowance for central Government Employees. Now you can scroll down below and check complete details regarding “Calculation and Taxability of House Rent Allowance (HRA)”

Calculation and Taxability of House Rent Allowance (HRA)
House Rent Allowances is given by the employer to the employee to meet the expenses in connection with Rent of the accommodation which the employee might have to take. House Rent Allowance is taxable under the head salary to the extent it is not exempt under section 10(13A) of the Act.

Exemption of H.R.A.

House rent allowance is exempt under section 10(13A) read with rule 2A, to the extent of the minimum of The following three amounts:

(a) Actual HRA received by the employee in respect of the “Relevant Period”

(b) Excess of rent paid for the accommodation occupied by him over 10% of the salary for the “Relevant Period” (Rent Paid -10% Salary)

(c) 50% of salary where the accommodation is situated at Mumbai, Calcutta, Delhi or Chennai and 40% Of salary where the house is situated at any other place for the “Relevant Period”

The minimum of the above three amounts shall be exempt from tax and the balance shall be taxable and thus included in the gross salary of the employee.

Download Automated House Rent Exemption Calculator U/s 10(13A)

Important Note

Condition: Under Sec 10(13A) an employee who is in receipt of House Rent Allowance can claim exemption, if he does not live in his own house, and pays rent in excess of 10% of his salary for his residential accommodation.

No entitlement to the exemption: In the following cases, exemption of HRA is not available to employee:-

(a) When an employee stays in his own house.

(b) When an employee does not pay any rent or incur any expenditure towards rent.

(c) When the rent paid is less than 10% of salary.

Relevant Period: Relevant period means the period during which the said accommodation was occupied by the Employee during the previous year.

Meaning of Salary: Total   

 1. Basic Salary  

  2.  Dearness Allowance (if forming part of retirement benefits)  

  3. % based commission on turnover.

Factors affecting exemption: Exemption of HRA depends upon the following factors:

(a) Salary of the employee (b) HRA Received (c) Rent Paid (d) Place of Residence

Where these four factors continue to be same throughout the year, the exemption u/s 10(13A) should be calculated

On “Annual basis”. However, if there is any change in respect of any of the above factors then calculation should be done in “Monthly basis”

The meaning of H.R.A.:-

If any allowance is given for House rent than it is called H.R.A.

Exemption of H.R.A. Under Section 10(13A) & Rule 2A:- If Employee receive H.R.A. than it will be taxable under section 10(13A) & Rule 2A as under-

A	Actual H.R.A. received	******
B	Rent Paid – 10% of Salary	******
C	40% and 50% of Salary	******
	Whichever is less	******

Note-1  40% and 50% depends on Rental place not on place of service

Note-2  50% of salary where the accommodation is situated at Mumbai, Calcutta, Delhi or  Chennai and 40% Of salary where the house is situated at any other place

On December 13, 2016 by www.taxexcel.net

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Calculation and Tax ability of House Rent Allowance (HRA). Today  we are Providing a Premium guide on Calculation and Tax ability of House Rent Allowance (HRA). Now you can Find  Best Notes For Calculation of House Rent Allowance. House Rent Allowance [Section 10(13A) & Rule 2A] Calculation and Tax Liability. How To Compute House Rent Allowance. We are Providing Full Computation for Calculation of House Rent Allowance for 2014-15. Now You can Scroll Down Below And See Full guide on Calculation and Tax ability of House Rent Allowance (HRA), House Rent Allowance ( HRA) Calculate in India, New House Rent allowance Exemption Rule, How Much House Rent Allowance is Exempt, House Rent Allowance Exemption Calculator, House Rent Allowance ( HRA) Rules and Tax Exemption, House Rent Allowance Act, House Rent Allowance Meaning, House Rent Allowance for central Government Employees. Now you can scroll down below and check complete details regarding “Calculation and Tax ability of House Rent Allowance (HRA)”

Calculation and Taxability of House Rent Allowance (HRA)
House Rent Allowances is given by the employer to the employee to meet the expenses in connection with Rent of the accommodation which the employee might have to take. House Rent Allowance is taxable under the head salary to the extent it is not exempt under section 10(13A) of the Act.

Exemption of H.R.A.

House rent allowance is exempt under section 10(13A) read with rule 2A, to the extent of the minimum of The following three amounts:

(a) Actual HRA received by the employee in respect of the “Relevant Period”

(b) Excess of rent paid for the accommodation occupied by him over 10% of the salary for the “Relevant Period” (Rent Paid -10% Salary)

(c) 50% of salary where the accommodation is situated at Mumbai, Calcutta, Delhi or Chennai and 40% Of salary where the house is situated at any other place for the “Relevant Period”

The minimum of the above three amounts shall be exempt from tax and the balance shall be taxable and thus included in the gross salary of the employee.

Download Automated House Rent Exemption Calculator U/s 10(13A)

Important Note

Condition: Under Sec 10(13A) an employee who is in receipt of House Rent Allowance can claim exemption, if he does not live in his own house, and pays rent in excess of 10% of his salary for his residential accommodation.

No entitlement to exemption: In the following cases, exemption of HRA is not available to employee:-

(a) When an employee stays in his own house.

(b) When an employee does not pay any rent or incur any expenditure towards rent.

(c) When the rent paid is less than 10% of salary.

Relevant Period: Relevant period means the period during which the said accommodation was occupied by the Employee during the previous year.

Meaning of Salary: Total   

 1. Basic Salary  

  2.  Dearness Allowance (if forming part of retirement benefits)  

  3. % based commission on turnover.

Factors affecting exemption: Exemption of HRA depends upon the following factors:

(a) Salary of the employee (b) HRA Received (c) Rent Paid (d) Place of Residence

Where these four factors continue to be same throughout the year, the exemption u/s 10(13A) should be calculated

On “Annual basis”. However, if there is any change in respect of any of the above factors then calculation should be done in “Monthly basis”

Meaning of H.R.A.:-

If any allowance is given for House rent than it is called H.R.A.

Exemption of H.R.A. Under Section 10(13A) & Rule 2A:- If Employee receive H.R.A. than it will be taxable under section 10(13A) & Rule 2A as under-

A	Actual H.R.A. received	******
B	Rent Paid – 10% of Salary	******
C	40% and 50% of Salary	******
	Whichever is less	******

Note-1  40% and 50% depends on Rental place not on place of service

Note-2  50% of salary where the accommodation is situated at Mumbai, Calcutta, Delhi or  Chennai and 40% Of salary where the house is situated at any other place

On November 25, 2016 by www.taxexcel.net

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House Rent Allowance (HRA) is best tax saving tools available to employees. With these, you can save up to 50% of your salary if you reside in Metro (40% of your salary if you reside in non-metro).

As per income Tax act, for calculation House rent allowance least of the following is available as deduction :

1.                  Actual HRA received

2.                  50% / 40%(metro / non-metro) of basic ‘salary’

3.                  Rent paid minus 10% of ‘salary’. Basic Salary for this purpose is basic+ DA forming a part+ commission on sale on fixed rate.

Cities Like, Delhi, Mumbai, Chennai, and Kolkata constitutes Metro. All cities other than these are non-Metro. So if you resides in cities like Gurgaon, Faridabad, Bangalore, Hyderabad, Pune, Indore, Chandigarh, Ludhiana, Manesar, Kerala, Goa, Panjim , Diu etc it would constitute as Nonmetro and only 40% deduction will be allowed.

Download Automatic House Rent Exemption Calculator U/s 10(13A)

On October 05, 2016 by www.taxexcel.net

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What is HRA (House Rent Allowance ) :-

House Rent Allowance (HRA) is best tax saving tools available to employees. With these you can save upto 50% of your salary if you reside in Metro (40% of your salary if you reside in non-metro).

On June 07, 2016 by www.taxexcel.net

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Salaried individuals can avail of house rent allowance (HRA) exemption under Section 10(13A). Self-employed professionals cannot be considered for HRA exemption, but they can claim home rent expenses under Section 80GG Max. Rs. 60,000/- P.A. ]

Effective the current financial year, those claiming HRA need to submit landlord’s PAN details if the rent is above Rs15,000 per month or above 1 Lakh P.A..

The actual HRA for tax exemption is lower of the following three numbers:

a) The actual HRA your employer provides you in the salary;

b) 50% of the basic salary when you reside in a metro or 40% for non-metro location; and

c) actual rent you pay minus 10% of basic salary.

For example, assume your basic salary is Rs46,000 per month and the actual HRA offered by the company is Rs26,000.

You rent an apartment in Mumbai for Rs25,000 per month.

Residence in Mumbai will make you eligible for a 50% of the basic pay for HRA exemption. These values are considered to find out HRA tax exemption:

 a) Actual HRA received, i.e., Rs26,000;

b) 50% of the basic salary, i.e., Rs23,000; and

c) excess of rent paid over 10% of basic salary, i.e., Rs25,000 – Rs4,600 = Rs20,400. Your HRA exemption is lower of the three (Rs20,400).

The taxable HRA amount is Rs26,000 minus Rs20,400 = Rs5,600.

Tax exemption on home rent for self-employed under Section 80GG is limited Max Rs.60,000/- as per Budget 2016. It is lower of three values:

a) Actual rent minus 10% of gross professional fees;

b) Rs 60,000 per annum; and

c) 25% of gross professional fees. If the self-employed is paying office rent, that can be shown as expense. If not, home office may be shown if a specific home area is used exclusively for office purposes.

Download Automated House Rent Exemption Calculator U/s 10(13A) with brief how to calculate the H.R.A. Exemption.

On March 30, 2016 by www.taxexcel.net

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