As per Metro / Non - Metro cities, How is House Rent Allowance (HRA) Decided and HRA Calculation as per 7th pay Commission ? KS Bagchi HRM Lucknow.
From India, Lucknow
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From India, Lucknow
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Dear KS Bagchi,
The House Rent Allowance (HRA) is a component of the salary paid by employers to their employees to meet the cost of renting a home. The calculation of HRA is based on certain criteria, and the amount can vary based on whether the city of residence is categorized as a metro or non-metro city.
As per the 7th Pay Commission, the HRA is calculated as follows:
1. 🏩 For Metro cities (Delhi, Mumbai, Kolkata, Chennai): HRA is 24% of the basic salary.
2. 🏞️ For Non-Metro cities (including Lucknow): HRA is 16% of the basic salary.
To calculate your HRA:
1. 🧀 Determine the basic salary, which is generally 40-50% of the total salary.
2. 🏨 Calculate the HRA percentage based on your city category (24% for metro cities, 16% for non-metro cities).
3. 🔖 Multiply the basic salary by the HRA percentage.
Example: If your basic salary is Rs. 30,000 and you live in a non-metro city like Lucknow, the HRA would be 16% of 30,000 = Rs. 4,800.
However, the actual HRA exemption under the Income Tax Act is the minimum of the following three amounts:
1. Actual HRA received.
2. 50% of salary (for metro cities) or 40% for non-Metro cities.
3. Rent paid in excess of 10% of salary.
Therefore, in your final tax computation, the HRA exemption may be lower than the HRA received based on the above three points.
It's also important to note that to claim HRA exemption, you need to provide rental receipts and the landlord's PAN if the rent exceeds Rs. 1,00,000 annually.
I hope this information is helpful. Please consult with a financial advisor or tax consultant for personalized advice.
😊 Stay safe and healthy!
From India, Gurugram
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28The House Rent Allowance (HRA) is a component of the salary paid by employers to their employees to meet the cost of renting a home. The calculation of HRA is based on certain criteria, and the amount can vary based on whether the city of residence is categorized as a metro or non-metro city.
As per the 7th Pay Commission, the HRA is calculated as follows:
1. 🏩 For Metro cities (Delhi, Mumbai, Kolkata, Chennai): HRA is 24% of the basic salary.
2. 🏞️ For Non-Metro cities (including Lucknow): HRA is 16% of the basic salary.
To calculate your HRA:
1. 🧀 Determine the basic salary, which is generally 40-50% of the total salary.
2. 🏨 Calculate the HRA percentage based on your city category (24% for metro cities, 16% for non-metro cities).
3. 🔖 Multiply the basic salary by the HRA percentage.
Example: If your basic salary is Rs. 30,000 and you live in a non-metro city like Lucknow, the HRA would be 16% of 30,000 = Rs. 4,800.
However, the actual HRA exemption under the Income Tax Act is the minimum of the following three amounts:
1. Actual HRA received.
2. 50% of salary (for metro cities) or 40% for non-Metro cities.
3. Rent paid in excess of 10% of salary.
Therefore, in your final tax computation, the HRA exemption may be lower than the HRA received based on the above three points.
It's also important to note that to claim HRA exemption, you need to provide rental receipts and the landlord's PAN if the rent exceeds Rs. 1,00,000 annually.
I hope this information is helpful. Please consult with a financial advisor or tax consultant for personalized advice.
😊 Stay safe and healthy!
From India, Gurugram
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