ITR Filing: The last date for filing Income Tax Return (ITR Filing Last Date) 31st July is slowly coming closer. In such a situation, everyone is preparing to file ITR. Whenever it comes to Tax Saving, House Rent Allowance i.e. HRA plays a big role in it. Under this, you get tax exemption on a lot of money. However, HRA is such a component in your salary, whose benefit is not available just like that, but for that one has to go through a complete calculation of 3 steps (HRA Calculation). Many people feel that all the HRA that their company is giving them is tax free, but the reality is very different from this. Let’s understand the whole math of HRA (Tax Planning) and know on how much money tax exemption is available.
Out of these 3, you will get the lowest HRA
When you are claiming HRA, you have to calculate 3 types of figures. Whichever figure is the lowest among them, you get tax exemption on it. The first is the HRA given by the company in the salary, it can be claimed.
HRA is different in metro and non metro
Talking about other figures, you can claim up to 50% of your basic salary as HR in metro cities. Whereas, you can claim up to 40% of your basic salary as HRA in non-metro cities.
Calculation from rent and basic salary
To find the third figure, you will have to deduct 10% of your basic salary from the total annual rent of your house. Remember, do not deduct 10% of the entire salary, deduct 10% of only the basic salary component. After this, you can claim HRA based on the amount that remains.
Let’s understand with an example
Suppose your basic salary is Rs 3 lakh and you live in a metro city. Also, let’s assume that your monthly house rent is Rs 15,000. In your salary structure, you are getting a house rent allowance of Rs 1.6 lakh from the company, which you can claim in the first case. In a metro city, 50% of the basic salary is Rs 1.5 lakh, which can be claimed in HR in the second case.
Now let us understand the calculation of the third situation
At the same time, a rent of 15 thousand rupees per month means that you spend 1.80 lakh rupees on house rent in a year. In the third situation, if we calculate, then after deducting 10 percent of your basic salary from this rent, the amount that remains can be claimed as HRA. That is, 1.80 lakh – 30 thousand (10 percent of basic salary) = 1.50 lakh rupees.
You can claim HRA of Rs 1.5 lakh
In this way, even though you are getting a house rent allowance of Rs 1.60 lakh from the company, you can claim only up to Rs 1.50 lakh under HRA. So when you do tax planning, calculate the amount of HRA at that time, do not calculate it according to the HRA of the salary structure, because many times people come under the tax net even by Rs 1 more.
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