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What is HRA?

What is HRA?

HRA stands for House Rent Allowance. House Rent Allowance is the amount allocated by an employer to the employee as a portion of their CTC salaries.

The employer decides the house rent allowance depending on different criteria like the city of residence and salary grade.

This allowance is regulated by the Section 10(13A) of the Income Tax Act. Only salaried individuals are entitled to house rent allowance.

Usually, house rent allowance for an employee residing in a metro city is 50% of basic salary and 40% of basic for employees residing in a non-metro city.

HRA Calculations

Metro city Resident = Basic Salary X 50%.

Non-metro city Resident = Basic Salary X 40%.

OR

Actual amount – 10 % of Salary.

Additionally, you can also claim tax deductions against house rent allowance. This claim is only available to employees living in rental accommodations.

This term is used in Salary Sheet calculations and also in your salary slips. See image below for reference:

Salary Slip Template

If you have any queries please share in the comment section below. I will be more than happy to assist you.

Filed Under: HR & Payroll Glossary

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I have worked in Excel and like to share functional excel templates at ExcelDataPro.

Comments

  1. Ashwini Songaonkar says

    June 14, 2020 at 2:28 pm

    Please provide me excel for work flow management

    Reply
    • Fahim Lashkaria says

      June 15, 2020 at 5:17 pm

      What kind of workflow management?

      Reply

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