HRA Calculator

HRA calculator

The house rent allowance (HRA) is a significant portion of your pay. HRA is mandatory for all employers to provide as compensation for housing expenses. The HRA amount is determined by various factors, including the employee's salary structure, actual salary, and city of residence. Calculating HRA for tax purposes can be a difficult task. As a result, an HRA calculator can be used to estimate deduction amounts and plan for upcoming taxes.

What is an HRA calculator?

A house rent allowance calculator is a tool that makes calculating HRA for tax purposes easier. It performs a complex calculation in seconds for salaried people. It considers the basic salary, rent paid, city of residence, dearness allowance, and HRA received, before calculating the HRA amount. The following information is required by the HRA calculator:

Basic salary: The most important aspect of a salary is the basic salary. It is the first line item on the salary slip's income side. The basic pay of employees is fully taxable.

Dearness Allowance: A sum paid to compensate one's salary for the effects of inflation. The second line item on the salary slip is DA. Employees are fully taxed on DA.

HRA received: The amount of HRA that the employee received from the employer. It is shown on the salary slip's income side.

Total rent paid: The total rent paid by the employee.

City of residence: The city of residence is important for HRA calculation. This is due to the fact that the HRA calculation will be based on whether the employee lives in a metro city or a non-metro city. HRA is 50% of salary (Basic + DA) in a metro city whereas the HRA for a non-metro city is 40% of salary (Basic + DA).

How is the HRA calculated?

HRA is an important component of a person's salary. It is the total amount paid by employers to employees for housing. It is determined by a number of factors, including the city of residence, the rent paid, and the actual HRA received. HRA will be the smallest amount among those listed below. This qualifies for a tax deduction.

• 50% of salary for a metro city, and 40% of salary (Basic + DA) for a non-metro city. According to Income Tax regulations, only Delhi, Mumbai, Chennai, and Kolkata are considered metro cities in India.
• Rent exceeding 10% of salary (Basic + DA)
• Actual employer-provided HRA

Example

Let's look at an example to better understand the deduction.

Ms Smiha's monthly base salary is INR 1,000,000. The salary allowance is INR 90,000, and the HRA is INR 30,000. Her monthly rent in Haryana is INR 25,000.

Her HRA deduction for income tax purposes will be the smallest of the following:

Because Haryana is a non-metropolis, the actual HRA is 40% of the salary (Basic + DA). Rent in excess of 10% of salary (Basic + DA).

The following information is required to calculate HRA:

Salary = base salary + DA = (100000+90000) * 12 = INR 22,80,000 HRA paid monthly at INR 30,000 or INR 3,60,000 per year

The rent is INR 25,000 per month or INR 3,00,000 per year.

Ms Divya's deduction amount will be the smallest of the following scenarios:

The actual HRA payment is INR 3,60,000.

Since Haryana is a non-metro city, 40% of INR 22,80,000 is INR 9,12,000, and the salary is INR 2,28,000.

Rent paid - 10% salary = INR 3,00,000 - INR 2,28,000 = INR 72,000

The smallest sum is INR 72,000. As a result, Ms Divya is eligible for a tax deduction of INR 72,000.

How to use a Paytm HRA calculator?

Paytm's online HRA calculator simplifies and automates HRA calculations. The calculator produces accurate results. Investors can easily calculate the HRA exemption and HRA taxable.

To use Paytm's HRA calculator, simply follow the steps below.

Enter the following information:

• HRA received
• Basic Salary
• Rent Paid
• And if you live in a metropolitan area

The HRA exemption and HRA taxable are calculated by the calculator after you click calculate.

Top benefits of using a Paytm HRA calculator?

The following are the advantages of using an HRA calculator:

Easy to use

All that is required to calculate HRA is to enter the details. Details such as starting salary, HRA, rent paid, and whether or not the employee lives in a major city.

Free use

The calculator is available online for free. As a result, anyone interested in determining the taxable portion of an HRA and the HRA exemption can use the calculator. Furthermore, the calculator can be used multiple times to compare different salary scenarios.

Better Planning

One can better plan their income taxes and finances by computing the HRA exemption and taxable portion.

Exact results

The calculations are correct and help salaried individuals determine the amount exempt from tax and the amount taxable under HRA.

Quick computation

The calculator expedites the calculation process. Individuals are not required to manually perform complex calculations. Hence, by using the calculator they can save time and effort.

What are the parts of a pay slip?

The following are the components of the income side of the pay slip:

Let's take a look at the online ways to check EPF balance-

• Basic Salary
• Special Allowance
• Conveyance Allowance
• Medical Allowance
• Dearness Allowance
• House Rent Allowance

The following are the components of the salary statement's Deduction side:

• Employee Provident Fund
• Tax Deducted at Source (TDS)
• Professional tax

What are the documents required to claim HRA?

The following documents are required to claim HRA:

• Rent agreement
• Rent receipts
• If the monthly rent exceeds INR 1 lakh, the landlord's PAN card must be provided.

What are the rules to claim HRA?

1. An employee should adhere to the following rules to claim HRA:
2. HRA cannot be more than 50% of the basic salary.
3. Employees are not permitted to claim the entire rental amount. The exemption amount is the lesser of the following amounts:
   • HRA payment received in full
   • If the employee lives in a metro city (Delhi, Mumbai, Kolkata, or Chennai), he or she will receive 50% of the basic salary; otherwise, they will receive 40% of the basic salary.
   • Actual rent paid less 10% of basic salary (basic + DA)
4. Individuals can receive HRA tax benefits in addition to their home loans.
5. If the annual rent exceeds INR 1,00,000, the landlord's PAN card must be submitted.
6. An NRI landlord must deduct 30% tax from the rent amount that must be declared.
7. In order to claim HRA tax exemption for rent paid in excess of INR 1,00,000, the employee must provide the landlord's PAN card details and a copy of the landlord's PAN card.

What are the documents required to claim HRA?

The following documents are required to claim HRA:

1. Rent receipts, the receipt should contain:
   • Date and landlord's name
   • The tenant's name and the landlord's PAN card information
   • Accommodation's address
   • Stay duration
   • Stamped revenue receipt with the landlord's signature
   • a photocopy of the rental contract (if required)
2. Rent agreement