What is HRA Exemption?
To calculate how much Income Tax you can save with HRA Exemption and to learn how to calculate, follow the steps below. We are using an Income Tax Calculator to show you how to calculate HRA Exemption.
Step 2: Fill in basic details
Step 3: Key in your salary details
Step 4: Declare your rent
Step 5: Calculate HRA Exemption
Step 6: Calculation Summary for HRA Exemption
As per your payslip, you are paid HRA of INR 384000.
The rent you paid over 10% of Basic Pay + DA + Commission is INR 144000.
And 40% of Basic Pay + DA + Commission comes to INR 384000. If you are living in a metro city this will be 50% instead of 40%.
The least of the three is calculated as your HRA exemption.
So, as per the calculation, HRA exemption is INR 144000.
Step 7: What if you move to a more expensive rented house?
Assume you are moving to a new house with rent of INR 30000. Let’s see what change it makes to your HRA exemption. Let’s make that change in the rent declaration.
Now, let’s compute the tax again.
Your HRA exemption earlier was INR 144000. And now, the HRA exemption with a higher rent is INR 264000.
So, if you move to a more expensive rented house, HRA exemption will help you pay up to 30% of the increase in rent.
The income tax calculator helps you understand the tax calculation process and also helps you save tax by letting you experiment your investment declarations. The income tax calculator advises you on how to save maximum tax.
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