How Much Tax Can You Save On House Rent Allowance? HRA Exemption Calculation For Income Tax Filing

As an employee, one of the common expenses that you incur is your rent. If you are living in a rented house, your employer may offer you a House Rent Allowance (HRA) as a part of your salary package. This allowance can be claimed as a deduction under the Income Tax Act, 1961, which can help you save on your taxes.

The HRA exemption can be claimed only if the employee is living in a rented accommodation and is receiving HRA from his employer. The amount of exemption is calculated as the minimum of the following three options:

1. Actual HRA received from the employer
2. Actual rent paid minus 10% of the basic salary
3. 50% of the basic salary if the employee is living in a metro city or 40% of the basic salary if living in a non-metro city

Knowing how to save tax on HRA can be beneficial for you as it can help you reduce your taxable income and save on taxes.

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