House Rent Allowance (HRA) Calculator
Calculate (House Rent Allowance) HRA Tax Benifit
What is an HRA Calculator?
The HRA Calculator is a kind of automatic online machinery that assists its user in determining the house rent allowance (HRA) as well as how much of a tax benefit he is eligible to receive. The HRA, which stands for house rent allowance, is a perk that is extended to salaried employees by their respective employers in the form of a benefit.
Because the law contains certain provisions that ensure HRA can be used to reduce tax liabilities, it is now possible for employees to benefit from HRA. This is because HRA can be used to reduce tax liabilities.
However, before beginning the process of calculation, it is important to keep in mind that, in order to be eligible for this tax benefit through HRA, one must be living in rented housing in order to be eligible for this tax benefit.
Why Should an HRA Calculator be Used?
If you are a salaried person and get HRA from your employer, then by using this calculator, you can have a clear picture of how much of the tax deduction can be enjoyed, and this is especially helpful if you are trying to figure out how much you can deduct.
Calculating it using pen and paper is a time-consuming process due to the large number of variables that need to be taken into consideration, such as the percentage of salary, the annual HRA, etc., and the fact that there is room for human error in the process. Consequently, making use of an online HRA calculator is always recommended.
Benefits of using HRA Calculator :
- straightforward and uncomplicated to use.
- The findings do not contain any trace of human error.
- dependable as well as productive.
- There is no charge to use this service.
- Provide an accurate result that is determined by the user's input.
Formula for calculating HRA (House Rent Allowance)
In the process of calculating tax-exempt HRA, there are several factors that remain hidden from view. One must realize that the amount that will be considered as the tax-exempt portion of HRA is actually the lowest of the following, and this will be the amount that will be taken into consideration.
- Amount given to the employee by the employer as their HRA.
- 40% of the salary in the case of other cities and 50% of the salary in the case of a metro city.
- Payment in excess of 10% of the employee's annual salary.
Let us have an example, Let's say a user resides in a major city and pulls in a monthly salary of 50,000 Indian rupees. The monthly rent that he pays is INR 15000, and his HRA payment is INR 25000 each month.
Now, annual HRA is= 25000 x 12 = 300,000 INR, 50% of the salary = 50000 x 12 x 50% = INR 300,000 excess rent paid over 10% annual salary = 15000 x 12 – (10% x 50000 x 12) = 180000 – 60000 = 120000 (INR)
This tax deduction for HRA amounts to 120,000 Indian rupees. Now consider the fact that you are responsible for performing the entire calculation on your own. Time and careful attention are required. The HRA calculator is available to you so that you can relieve some of this stressful burden.