UBS

House Rent Allowance (HRA)

What is House Rent Allowance ( HRA)?

House Rent Allowance ( HRA) is an allowance paid by the company to an employee as a rent allowance in addition to their basic salary. This is an important component of the Indian Payroll System. Salaried individuals, who are living in a rented house can claim the HRA to lower their taxes, as it is done to help employees with tax benefits. An employee can claim partially or wholly.

As the name suggests, It is related to rented accommodation, so if you don’t live in a rented house, this allowance is taxable.

HRA Facts:

  • The rent amount should be less than 10% of the basic salary.
  • If an employee lives in a metro city, then it should be 50% of the salary & if there is a non-metro city then it should be 40%.
  • Employees can avail of tax benefits of HRA even if he or she is having a home loan.
  • If annual rent paid by an employee exceeds 1,00,000/-Rs then there’s a need to submit the landlord’s PAN card. And If the landlord does not have a PAN card, a self-declaration should be submitted.
  • HRA cannot exceed 50% of an employee’s salary.

Also, See: Conveyance Allowance

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