 How to Calculate the Income Tax Exemption on House Rent Allowance (HRA)?

If you happen to be a salaried employee claiming House Rent Allowance (HRA) from your employer, you are eligible for an Income Tax exemption under Section 10(13A) of the Income Tax Act. How do you calculate this exemption amount? Simple. Find the minimum of the following three options: Actual house rent allowance received from your employer Actual house rent paid by you minus 10% of your basic salary 50% of your basic salary if you live in a metro or 40% of your basic salary if you live in a non-metro This minimum figure is the allowed income tax exemption on house rent allowance. It’s prudent to work this out so that you can structure the other components of your variable pay better. Have you ever looked close at the statement of tax generated each month (along with your salary slip) by your employer? Do you understand where your money is going? If no, it’s high time you did.