If you happen to be a salaried employee claiming House Rent Allowance (HRA) from your employer, you are eligible for an Income Tax exemption under Section 10(13A) of the Income Tax Act. How do you calculate this exemption amount? Simple.

Find the minimum of the following three options:

1. Actual house rent allowance received from your employer

(For Basic Pay + Grade Pay = Rs 17150/-) à Rs 3430/-

2. Actual house rent paid by you minus 10% of your basic salary

Actual HR Paid should be > Rs 5145, so that [Actual HR - 10 % of basic (Rs 1715)]à >Rs 3430/-

i.e.. to get full exemption of your HRA , HR Paid by should be atleast 10% more then % og HRA you get.

For Guwahati, where HRA is 20 % of basic, Your HR Paid should be 30 % of your (BP + GP)

3. 50% of your basic salary if you live in a metro or 40% of your basic salary if you live in a non-metro

40 % & 50 % of your basic will always be higher then your HRA, thus will be of no use.

The minimum figure, from 1,2,3 above is the allowed income tax exemption on house rent allowance.

SUBHASISH BHATTACHARJEE