ITR filing: How to calculate HRA, here is complete information related to it

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HRA is a part of your salary. Under this, you can save tax through house rent. Let us tell you how you can get tax benefit from it and how it is calculated.

There is time till 31 July for ITR filing. You should file your income tax return on time. But before filing ITR, it is very important to know about it well. You can save tax in many ways. HRA is one of them. HRA is a part of your salary. Under this, you can save tax through house rent. Let us tell you how you can get tax benefit from it and how it is calculated.

What is HRA?

HRA is a special tax saving provision under section 10(13A) of the IT Act. The purpose of HRA is to reduce the expenditure on housing. Deduction can be taken as rent. HRA varies from city to city. Its contribution is more in metro cities. This reduces the tax liability. Let us know how to calculate it.

How is HRA calculated?

Suppose you work in Delhi NCR and your basic salary is Rs 40,000. That means your annual salary is Rs 4,80,000. Now out of this you get Rs 11,000 as HRA. If you spend Rs 14,000 for living, you can avail the HRA exemption amount.

this is the calculation

HRA amount 11,000 x 12 = Rs 1,32,000 50% of basic pay (in metro cities), i.e. 50% of Rs 4,80,000 = Rs 2,40,000 Actual rent of your house, less 10% of basic pay Rs 1,68,000 ( 14,000 x 12) (subtract) Rs 48,000 (10% of Rs 4,80,000) = Rs 1,20,000

Now as per this calculation, you are eligible for HRA exemption of minimum amount of Rs.1,20,000.

(pc rights of employees)

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