How do you calculate the HRA?

Answer 1

Lets assume you have HRA as a salary component. So the next step is to calculate the taxation aspect of the HRA Component. In order to do this, you need the following:

1. Your Basic Salary

2. The Actual HRA Component in your Salary

3. The Actual Rental paid every month

4. Whether you live in a Metro or a non-metro

Once you have these details, try to calculate the following numbers:

1. If you are in a Metro - take 50% of your Basic salary and if not, take 40% of your Basic Salary

2. The Actual monthly HRA component from your salary

3. The Actual Rent paid - 10% of your Basic Salary

Of these 3 figures whichever is the least is your eligible tax deduction against HRA.