calculation of HRA exemption.
Least of following three will be exempted
*Hra received
*50% of salary in case of residential accommodation taken on rent is situated in Bombay ,Calcutta ,Delhi, or Madras (Chennai) and 40 % of salary in in any other case.
*rent paid in excess of 10 % of salary
other points to be noted
Salary for this purpose mean
-Basic salary
-Dearness Allowance if terms of employment so provides.
-commission based on a fixed percentage of trunover.
-all other allowances and perquisites is to be excluded.
-Salary related to period of rent should only be considered on due basic .
-Salary received in period as advance or arrear not related to calculation period should not be included.
For calculating 40/50 % as per point 2 above place of residential accommodation is important ,not where the person is working.suppose Rajiv taken a house in Delhi on rent but has working in Rohtak than he is eligible as per point 2 upto 50 % as house is situated in Delhi.
The calculation should be done on separately(monthly) if salary or HRA has varies during the year.
No,Hra exemtion if Hra paid is less than 10 % of salary.
Again exemption is denied where an employee lives in his own house, or in a house for which he does not pay rent.
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