How to calculate Exemption on HRA for Income Tax Return?

If you have not been able to submit rent receipts to your employer to claim exemption on HRA (House Rent Allowance) we tell you how you can claim it at the time of filing your tax return.

Here is the information you need to claim an exemption in your return –

• Look up your basic salary from your payslip
• Find out if you get DA or Dearness Allowance
• HRA received from payslip
• Actual rent paid from rent receipts
• PAN of your landlord (has to be provided in the Tax Return if rent payments are more than Rs 1,00,000 per annum)

The minimum of the following is your exemption –

• HRA
• Rent paid less 10% of (salary +DA)
• Actual rent paid

You can also use our HRA calculator to calculate your exempt and taxable portion of HRA. Click here.

Now you need to adjust your total taxable salary with the exemption. Remove whatever amount is included as taxable HRA and add back the new taxable HRA calculate above. If HRA is fully exempt, only remove the amount which is already included as taxable. Now you have your new taxable salary which you can disclose in your income tax return.

Do remember you don’t need to submit any documents to ClearTax or to the income tax department, but you must file them safely with yourself should the Assessing Officer ask for them.