HRA Full Form, Salary, Commission Pay, Exemption, Allowance, Calculation

HRA Full Form Is House Rent Allowance. House Rent Allowance(HRA) is a benefit or allowance available to a salaried person. It is the amount paid by the employer to his employee as a part of salary to meet the cost of living in rented accommodation.
It is a part of your salary which is provided by the employer towards the expenses incurred for rented accommodation. You can claim HRA exemption only if you are living in a rented house. HRA exemption is covered under Section 10(13A) of the Income Tax Act, 1961 as well as Rule 2A. House Rent Allowance or HRA is the salary component of most salaried individuals. For those living in rented accommodation, it can help them save tax.

हाउस रेंट अलाउंस (HRA) एक वेतनभोगी व्यक्ति के लिए उपलब्ध लाभ या भत्ता है। यह नियोक्ता द्वारा अपने कर्मचारी को किराए के आवास में रहने की लागत को पूरा करने के लिए वेतन के एक हिस्से के रूप में भुगतान की गई राशि है।
यह आपके वेतन का एक हिस्सा है जो नियोक्ता द्वारा किराए के आवास के लिए किए गए खर्च के लिए प्रदान किया जाता है। आप एचआरए छूट का दावा तभी कर सकते हैं जब आप किराए के घर में रह रहे हों। एचआरए छूट आयकर अधिनियम, 1961 की धारा 10(13ए) के साथ-साथ नियम 2ए के तहत आती है। हाउस रेंट अलाउंस या एचआरए अधिकांश वेतनभोगी व्यक्तियों का वेतन घटक है। किराए के आवास में रहने वालों के लिए, यह उन्हें टैक्स बचाने में मदद कर सकता है।

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HRA Calculation with Example

The salaries of both public and private sector employees are made up of several parts and are allocated for various expenses. HRA is one such component. House Rent Allowance(HRA) can be settled or obtained through a special agreement between you and your employer.

HRA exemption from tax is covered under Section 10-13A of the Income Tax Act and there is a provision for deduction of HRA based on the lowest of the following amounts:

  • The actual amount of HRA paid by the employer
  • 50% of your salary is eligible for HRA exemption if you live in a metro city in India
  • 40% of your salary is HRA exempt if you live in a non-metro city
  • Actual rent paid every month, minus 10% of your salary (here salary means basic pay, which includes commission and dearness allowance).

HRA Full Form: HRA Rules for Self Employed Individuals

If you are a self-employed individual, you can also claim HRA deduction and tax exemption under Section 80GG of the Income Tax Act. This section also applies to those of you who are salaried individuals when you do not get HRA.

The HRA rules under section 80GG are as follows:

  • House Rent Allowance or HRA exemption is available only to HUF and individuals under the Act
  • Self-employed individuals and salaried individuals can claim rent deduction only if they do not get tax exemption under the provisions of section 10-13A.
  • Employee, HUF (Hindu Undivided Family) in which the employee is one of the members, spouse, or minor child shall not enjoy the ownership of any residence where the person concerned is residing or working
  • Those who want to get HRA exemption under section 80GG should not claim tax benefits related to any self-occupied property which they have elsewhere
  • Under section 80GG, those who wish to claim HRA deduction should submit a self-declaration using Form 10-BA. In this form, the person has to show that he/she fulfills all the other above-mentioned conditions.

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Conditions for Claiming HRA Exemption.

  • Under section 80 or any other section, HRA exemption is provided only if you pay rent to the landlord
  • No HRA deduction for the period when rent is not paid
  • HRA deduction is calculated monthly when your job location changes (i.e. when you shift from non-metro to metro city or vice versa), or there is a change in your salary. Hence, HRA exemption or deduction may vary for the period of change separately
  • Apart from your father, if you pay rent to any other family member, HRA and related tax exemption will be provided by the employer. To claim HRA deduction, you must pay rent on a regular monthly basis and that too through bank transfer to the IT department to help you clear your expenses easily.

HRA in new tax regime

Finance Minister Nirmala Sitharaman recently announced a new tax regime for tax-paying individuals in India. This new arrangement was announced during the announcement of the Union Budget for the current financial year.

The new system has seen a lot of changes as compared to the old regime. However; one of the biggest changes is the fact that the new regime will not have any exemptions or deductions from the previous tax regime. These also include House Rent Allowance or HRA. And Thus; if you opt for the new tax regime and file your taxes accordingly, you will not be able to enjoy the deduction for HRA.

FAQ”S On HRA Full Form

What is HRA in a company?

HRA – House Rent Allowance. House Rent Allowance (HRA) is an important component of the salary which is paid by the employers to meet the housing requirements of the employees.

What is basic HRA?

HRA is mainly determined by your salary. As per Income Tax rules; the tax-free portion of HRA (House Rent Allowance) is the least of the following amounts: Actual HRA component of salary. 50% of basic pay if he resides in Delhi, Chennai, Kolkata, or Mumbai; 40% if his residence is in any other city.

HRA Full Form: What if the rent paid is less than 10% of the salary?

10% of your basic salary minus the total rent you pay. You can either submit your rent receipt to the employer or the government at the time of filing your Income Tax Return (ITR). 10 What is the tax liability if my entire HRA is not tax-exempt?

Is HRA mandatory in salary?

HRA exemption is available only to salaried individuals (who have opted for the old tax regime). Self-employed professionals cannot take advantage of this deduction. The HRA exemption amount is deductible from one’s total income before arriving at the gross taxable income.

Can I claim HRA if I live in my own house?

Since you are living in your own house, you will not be able to claim HRA. However, you will be able to claim tax benefits on both the principal and interest paid on the home loan.

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