How HRA is taxed ?

Let's understand this by taking one Example ;

Mr. Ritesh Gupta is Employed in Taxount (West-Bengal) and has taken up accommodation on rent of RS 30,000/-

He receives a Basic Salary of RS 50,000/- (Monthly) along with DA 10,000/- (monthly) which forms a part of the salary. He Also Receives 1,00,000/- as an HRA from his Employer During the Year

.

Note: If the Payment of Rental Expense is more than Rs 1,00,000/- annually, then it is mandatory to provide the PAN Number of the Landlord while Filling Income-tax Return.

S.no	PARTICULARS	AMOUNT
1	Actual HRA Received	1,00,000/-
2	50% of [(50,000+10,000)*12]	3,60,000/-
3	Actual Rent 360000 - 10% of [50000+10000)*12]	2,88,000/-
4	HRA deduction = Least of 1,2,3	1,00,000/-

Conclusion: (i) Actual HRA received,

(ii) 50% of Basic+DA or

(iii) Actual Rent received -10% of Basic Plus DA,

(i),(ii),(iii) Whichever is lower

Hence, Rs 1,00,000/- would be Exempt from Salary U/s 10(13A).

Note: Also if the Employee pays the rental expenses but doesn't receive the HRA part of a Salary from the Employer or Paying Rental Expenses but doesn't have salary Income, the benefit of Paying Rental Expenses can still be claimed under the section of 80GG of the act.