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House Rent Allowance: Eligibility, benefits, tax implications, how to calculate HRA exemption and more queries answered
House Rent Allowance (HRA) is a vital part of employees' salaries, offering tax benefits. To qualify, individuals must be salaried employees living in rented accommodations. The exempt HRA amount is determined by the lowest of three factors: actual HRA received, annual rent paid minus 10% of salary, or 50% of basic salary (for metro cities) or 40% (for non-metro cities). Documentary evidence of rent payment is crucial. Employees residing in their own homes cannot claim HRA exemption, and formal rental agreements are required. HRA tax benefits apply only under the old tax regime.
House Rent Allowance (HRA) is a vital part of employees' salaries, offering tax benefits. To qualify, individuals must be salaried employees living in rented accommodations. The exempt HRA amount is determined by the lowest of three factors: actual HRA received, annual rent paid minus 10% of salary, or 50% of basic salary (for metro cities) or 40% (for non-metro cities). Documentary evidence of rent payment is crucial. Employees residing in their own homes cannot claim HRA exemption, and formal rental agreements are required. HRA tax benefits apply only under the old tax regime. 
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