House Rent Allowance (HRA) Calculator
Calculate (House Rent Allowance) HRA Tax Benifit
What is HRA Calculator?
HRA CALCULATOR is a kind of automatic online machinery that helps its user to determine the House rent allowance (HRA) along with how much of the tax benefit he can enjoy.
HRA or House rent allowance is a kind of privilege that is being offered towards salaried personal by their employer. Now as per law, HRA can be beneficial towards the employees because there are certain provisions that ensure HRA can be used to reduce tax liabilities.
But before jump into the calculation process, one has to keep that in mind that one can only be entitled to receive this tax benefit through HRA if he is living at a rented accommodation.
Why use a HRA Calculator?
if you are a salaried person and getting HRA from your employer, then by using this calculator you can have a clear picture about how much of the tax deduction can be enjoyed.
It is a long procedure to calculate it through pen and paper as it requires a lot of variables in consideration like percentage of salary, annual HRA, etc. and there are chances of having human error. Thus using an online HRA calculator is always advisable.
Advantages of using HRA Calculator :
- Simple and easy to access.
- Results are free from human error.
- Reliable and effective.
- Completely free to use.
- Deliver accurate result based on the input by user.
Formula of calculating HRA (House Rent Allowance)
There are several factors are hidden in the calculation process of tax exempted HRA. One have to understand that the amount that will be considered as tex exempted portion of HRA, is actually the lowest of the following,
- Amount received from the employer as HRA.
- 50% of the salary in case of metro city and 40% for other cities.
- Excess payment over 10% of annual salary.
Let us have an example, suppose a user live in a metro city earned INR 40000 monthly salary. He pays INR 10000 as monthly rent, and his monthly HRA is INR 20000.
Now, Annual HRA is= 20000 x 12 = 240,000 INR 50% of the salary = 40000 x 12 x 50% = INR 240,000 excess rent paid over 10% annual salary = 10000 x 12 – (10% x 40000 x 12) = 120000 – 48000 = 72000 (INR)
this INR 72000 is his tax deduction over HRA. Now give it thought that you are doing the whole calculation all by yourself. It needs time and precision. To lower this hectic burden HRA calculator is there for you.