Prajna Capital - An Investment Guide

House rent allowance ( HRA ) is given by employers to employees as part of salary. It is mentioned in the terms and conditions of employment. HRA is given to meet the cost of rented premises taken by an employee for his stay. A person can claim exemption on his HRA under the Income Tax Act, if he stays in a rented house and is in receipt of HRA from his employer. The exemption of HRA is covered under Section 10 (13A) of the Income Tax Act and Rule 2A of the Income Tax Rules. Two basic conditions need to be met to qualify HRA received for tax exemption. One, rent must actually be paid by the assessee for the house he occupies, and two, the rented house must not be owned by him. The amount of HRA exempt is the least of these: The actual amount of allowance received by an assessee in the relevant period, and during which the rented accommodation was occupied by him. The amount by which the rent paid by the assessee exceeds one-tenth of his salary. If the house is in Mumbai, Calcutta, Delh...