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HRA CALCULATION

Ramkrishna (Accountant) (325 Points)

27 May 2008

I AM GETTING BASIC SALARY & DA 10000 RS. PM. BESIDES THIS HRA IS ALSO REC. BY ME OF RS. 1500PM. I PAY RS. 1500 TOWRADS HOUSE RENT . THE HOUSE IS NOT OWNED OR LEASED OR HORED BY EMPLOYER. WHAT WILL BE THE VALUATION CRITERIA FOR THIS TAXABLE HRA ACC. TO IT ACT & RULE.

CAN IT BE DEEMED THAT THAT HIRED OR TAKEN ON LEASE BE EMPLOYER?

PLA HELP ME.

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7 Replies

Manish Soni (CA , CS) (828 Points)
Replied 27 May 2008

least of the following exempted:

1.Amount actually received

2.Rent Paid - 10 % of salary (B/S+D.A)

3.50 % of Salary (for Kol,Del,Chen,Mum)

40% of salary (other cases)

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Shekar (CA & LCS ) (1109 Points)
Replied 27 May 2008

Hi..

To claim HRA the basic conditions r..

The employee must be staying in rented house n should be paying rent..

I dont know y u think tht house should belong to employer...

can u be liitle clear......

M.Sriram Shenoy (CA Final) (814 Points)
Replied 27 May 2008

This will be taxed in the hands of the employee who receives HRA.

The calculation for HRA depends upon the place of residence of employee.

By applying the provisions of sec 10(13A), the least of the amount will be exempt from the actual HRA received, thus taxing the excess portion after exemption, if any, in the hands of the employee.The main criteria to claim HRA is that the employee should have paid rent during the relevant period. And for claiming exemption of HRA, salary for the purposes of HRA should be taken for the respective period for which the employee was residing in the rented premises.

As far as this case is concerned, there wont be any tax implication in the hands of the employer.There need not be any assumption as regards the ownership status of the house that the employer claims.