House Rent Allowance Online Calculation Tool

HRA Online Calculator 2024 after 7th CPC

The HRA, or House Rent Allowance, is a standard feature of a typical Indian employee’s compensation package that helps in covering the cost of rent. It is free of tax up to a specific limit, making it a highly attractive aspect of the salary structure. The amount an employee receives under HRA is determined by their salary, the city they reside in, and the precise rental rate.

In India, the HRA amount is calculated based on a percentage of the employee’s basic pay, which varies by city, with higher rates applying to those living in metropolitan areas. The actual HRA amount is based on the rental fee paid and cannot exceed a certain percentage of the employee’s basic salary. Eligibility for HRA requires an employee to live in a rented residential property, and they must provide evidence of rent payments to their employer.

What is the meaning of HRA?

HRA is given by companies to their staff as a component of their pay in order to aid in paying for accommodations. Meeting the prerequisite of living in a rented residence qualifies one for exemption under the HRA. The exemption, governed by Section 10(13A) and Rule 2A of the Income Tax Act of 1961, encompasses HRA.

What is House Rent Allowance in Salary?

The HRA is a perk offered to employees that assists with covering living expenses while working in a city. While it is considered a portion of an employee’s salary, some of it may be excluded from taxes if certain qualifications are met as outlined in Section 10 (13A) of the IT Act of 1961. The amount of HRA given to employees is determined by employers based on factors such as salary, compensation level, and city of residence. It’s recommended that employees talk to their employers to ensure they receive the maximum tax benefits allowed under the Income Tax Act.

What is the current rates of HRA?

The rates of HRA can be modified based on the Dearness Allowance (DA) percentage. As per the current proposition of the 6th Central Pay Commission, occupants living in Class X cities can receive 30% of basic pay + grade pay + military service pay + NPA, while those living in Class Y and Z cities are eligible for 20% and 10% correspondingly. However, if the DA surpasses 25%, the HRA rates will be revised to 27%, 18%, and 9% for X, Y, and Z category cities respectively. Further adjustments will be made when the DA goes beyond 50%, bringing the rates back to 30%, 20%, and 10%.

What are the benefits of HRA for Govt Employees?

The House Rent Allowance (HRA) serves as an important part of the Central Government employees’ compensation package, covering expenses associated with rental housing. HRA rates are classified into three groups, namely X, Y, and Z based on the city of residency. With effect from July 1st, 2021, HRA rates have been revised to 9% (Z Class), 18% (Y Class), and 27% (X Class) for their respective cities. Employers allocate a portion of an employee’s basic salary towards this allowance, based on their location. Calculating the HRA within the salary is a simple process. For instance, if an employee’s basic salary is Rs. 49000, the amount of HRA they would receive may vary from Rs. 13230 (27%), Rs. 8820 (18%), to Rs. 4410 (9%), determined by their place of residence.

When will increase HRA to 30 percent?

The House Rent Allowance (HRA) for Central Government employees underwent a revision on July 1, 2021. Another revision is scheduled to take place in 2024 if the dearness allowance (DA) percentage reaches 50%. If the DA increase does reach 50%, the HRA is set to increase from 27% to 30%. As per a memorandum from the Department of Personnel and Training, once the DA crosses 50%, the HRA will be increased to 30%, 20%, and 10% respectively. Additionally, when the DA surpasses 25%, the HRA will also be raised to 27%, 18%, and 9% of Basic Pay in X, Y, and Z cities. Furthermore, the HRA will be increased to 30%, 20%, and 10% of Basic Pay in these cities when the DA reaches 50%.

What is the minimum rate of HRA?

The new minimum HRA rates will provide a positive impact for over 700,000 employees. In X-class cities, the rates have been raised to at least Rs. 5400, while it will be a minimum of Rs. 3600 for Y-class cities and at least Rs. 1800 for Z-class cities. It is worth noting that the minimum HRA amount has been set at Rs. 1,800, which is equivalent to 10% of the minimum basic pay.

Classification of Cities for HRA after 7th CPC

The Classification of Cities for HRA after the 7th CPC is based on the population record of Indian cities, which are categorized into X Cities, Y Cities, and Z Cities. For HRA purposes, X and Y class cities and towns are eligible for 24% and 16% HRA respectively. A State-wise list of X, Y, and Z class cities is provided below.

In Andhra Pradesh and Telangana, Hyderabad is an X city with a 24% HRA. Vijayawada, Warangal, Greater Visakahapatnam, Guntur, and Nellore are Y cities with a 16% HRA. Guwahati is the only Y city in Assam, while Patna is the only Y city in Bihar.

Chandigarh and S.A.S. Nagar, Mohali, are the two Y cities in Chandigarh with a 16% HRA. In Chhattisgarh, Durg-Bhilai Nagar, and Raipur are the two Y cities. Delhi is an X city, eligible for a 24% HRA. Ahmedabad is the only X city in Gujarat, while Rajkot, Jamnagar, Bhavnagar, Vadodara, and Surat are Y cities with a 16% HRA. Faridabad and Gurgaon are Y cities in Haryana, eligible for a 16% HRA.

In Jammu & Kashmir, Srinagar and Jammu are Y cities, eligible for a 16% HRA. In Jharkhand, Jamshedpur, Dhanbad, Ranchi, and Bokaro Steel City are Y cities. Karnataka has Bangalore/Bengaluru as an X city with a 24% HRA. Belgaum, Hubli-Dharwad, Mangalore, Mysore, and Gulbarga are Y cities with a 16% HRA.

In Kerala, Kozhikode, Kochi, Thiruvananthapuram, Thrissur, Malappuram, Kannur, and Kollam are Y cities. Gwalior, Indore, Bhopal, Jabalpur, and Ujjain are Y cities in Madhya Pradesh. Greater Mumbai and Pune are the only X cities in Maharashtra. The other cities such as Amravati, Nagpur, Aurangabad, Nashik, Bhiwandi, Solapur, Kolhapur, Vasai–Virar City, Malegaon, Nanded-Vaghela, and Sangli are all classified as Y cities with a 16% HRA.

In Odisha, Cuttack, Bhubaneswar, and Raurkela are Y cities. Puducherry/Pondicherry is a Y city. Amritsar, Jalandhar, and Ludhiana are Y cities in Punjab. Bikaner, Jaipur, Jodhpur, Kota, and Ajmer are Y cities in Rajasthan. Chennai is the only X city in Tamil Nadu, while Salem, Tiruppur, Coimbatore, Tiruchirappalli, Madurai, and Erode are Y cities with a 16% HRA.

In Uttar Pradesh, Moradabad, Meerut, Ghaziabad, Aligarh, Agra, Bareilly, Lucknow, Kanpur, Allahabad, Gorakhpur, Varanasi, Saharanpur, Noida, Firozabad, and Jhansi are all classified as Y cities. Dehradun is the only Y city in Uttarakhand. Kolkata is the only X city in West Bengal while Asansol, Siliguri, and Durgapur are Y cities with a 16% HRA. Note that Saharanpur was classified as a Y class city with effect from June 2011.

HRA Exemption from Income Tax

If you are a salaried employee seeking exemption from Income Tax on your HRA (House Rent Allowance), you can take advantage of Income Tax Rules 10(13A) and Rule 2A. These rules allow you to claim exemption on the following: the actual HRA received in your salary, 40% of your salary (Basic Pay + DA) for Non-Metros, 50% of your salary (Basic Pay + DA) for Metros like Mumbai, Calcutta, Delhi, or Chennai, and rent paid minus 10% of your salary. Keep in mind that if you are living in your own house or not paying rent, you will not be eligible for HRA exemption. However, our HRA Exemption Calculator can help to determine the exact amount of exemption you can claim. Simply use the calculator and enjoy a tax-free income with HRA exemption.

7th Pay Commission New HRA Table

HRA Rates for Pay Matrix Level 1

HRA Rates for Pay Matrix Level 2

HRA Rates for Pay Matrix Level 3

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