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Hra benefit

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RAJESH SHUKLA (Querist)
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25 January 2012 WE Partnership Firm in Delji, and we had paid Rs. 4,20,000/- per month to senior manager through cheque from JUly, 2011 to January, 2011. Kinldy let me know that how can we calculate the HRA Benefit. We had not deducted any TDS on this payment.

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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25 January 2012 As per the Indian income tax law, the HRA exemption should be calculated as the least of the following.
1. Rent paid in excess of 10% of basic salary.
2. Actual HRA received by the employee.
3. Forty percent of basic salary, if the location of the residence is in a non-metro city/town or 50% of basic salary, if the location of the residence is in a metro city
From the above “least of three” rule, it is clear that HRA exemption amount is determined by a number of factors — Basic pay, location of the residence, rent paid by the employee, and the HRA paid to the employee.

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