Click here do download the Automatic HRA Calculator U/s 10(13A)

How to calculate the House Rent Exemption Calculation as per the Income Tax Rules.Given below the Calculation Process with an example
Under section 10(13A) of Income Tax Act, 1961, House Rent Allowance granted by an employer to the employee towards meeting expenses actually incurred on rent payment for the residential accommodation of the employee is exempt from income tax. This exemption is not available to an employee who is residing in his/her owned house.
HRA benefit is computed by taking the lowest of the following under the Income-tax Act, 1961:
1) Actual HRA received;
2) Rent paid minus 10 per cent of salary;
3) 50 per cent of salary for individuals living in Delhi, Mumbai, Kolkata or Chennai and 40 per cent of salary for individuals residing in any other city.

While claiming HRA benefit, an employee is required to provide certain documents to the employer like rent receipts, copy of lease agreement, etc. These can vary from employer to employer.

Central Board of Direct Taxes (CBDT) has vide CIRCULAR NO. 8/2013, Dated: Dated: October 10, 2013 said if annual rent paid by the employee exceeds Rs 1,00,000 per Year, it is mandatory for the employee to report PAN of the landlord to the employer.

As per the circular, individuals who are drawing House Rent Allowance up to Rs 3,000 per month need not provide any documents. The exemption is provided to reduce administrative difficulties for the employer. However, employees may be required to substantiate their case if the tax officer raises any queries.

In case the landlord does not have a PAN, a declaration to this effect from the landlord along with the name and address of the landlord should be filed by the employee.Copy of a sample declaration is given below.

                                                                RENT RECEIPT
           To                                                                                                  Date:-

           Name & Address    

                                                  
                                                                DECLARATION

              I ____________(Full name and address of the declarant) aged ____ do hereby

   declare that I have leased the Flat No._______________________________ From
                                                                                            
1st April’2013 to 31st March’2014 to ___________(Name of lessor) at a

monthly rent of Rs. _______/- ( __________________ only). Further I do hereby

declare that my total income during the financial year 2013-2014 did not exceed the statutory limit 

prescribed under Income tax Act,1962 and have not assessed to tax and does not have a PAN card.

                                                               VERIFICATION

     I,_________________ do hereby declare that what is stated above is true to the best of my knowledge and belief.

Verified today, the _____________ day of _________________ at ________.


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