Question: My basic pay is Rs 266,000 pa DA is Rs 64,000 pa I get HRA Rs 2,400 pm I pay rent for a house Rs 2900 pm . My question is that HRA will be exempted from tax or not . (ii) Is it compulsory or not to submit rent receipt?
Answer: Yes, you will be eligible for HRA exemption - provided you submit rental receipts as documentary proof. The HRA exemption you will be eligible for is least of the three below:
a) Actual HRA received - Rs 2,400pm * 12 = Rs 28,800
b) 50 % of salary (assuming you reside in a metro, else 40%) = Rs 330,000 * 50% = Rs 165,000
c) Excess of rent paid over 10 % of salary = (Rs 2,900 pm*12) - (Rs 330,000* 10%) = Rs 1,800
Note: Salary for the purpose of HRA is = Basic + DA (forming part of salary for retirement benefits).
Warm regards,
Expert @ TaxYogi
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