How is exempted HRA calculated? Is it done on a monthly basis or is it done on a yearly basis?

Question

Is the HRA exempted calculated monthly basis or yearly basis?

I have moved from one company to other.

Will my tax exempted HRA calculated on yearly basis? i.e, least of

1. 40%(Basic+DA of both companies for the FY 07-08)

2. Sum of HRA received in both the companies for the FY 07-08

3. Rent Paid for the whole year -10%(Basic+DA of both companies for the FY 07-08)

Or is the exempted HRA calculated on monthly basis?

Answer 1

It is on yearly basis.

Read about HRA

http://mytaxes.in/index.php?topic=17.0

Answer 2

HR exemtion is based on the following things:

Salary,place of residence,Rent paid and HRA recd.If there is no change during the year,it can be calculated either way monthly or annually.Since in this case  there is a change in particulars during the year it should be separately calculated till the next change

Answer 3

HRA is always calculated at yearly basis.the amount is always shown in ur Form no.16 that u get fm ur Employer.when u change d company pl dont forget to collect ur form no.16 though it is in most Companies it is issued in May-June of the following year.so when u get that ur  return wil b a composite return of two salaries & subsequent deductions.1 of the wys of keeping d taxes minimum is to keep d basic salary as low as possible & increase d amount of allowances whic most Companies wil disagree as they hav to pay Fringe Benifit Tax(FBT) on that.

one more pt.,in the 1st point above i.e. 40%(Basic+DA of both companies for the FY 07-08),it is 50% in case u r staying in a metro.rest of the allowance is taxable.thanks

Answer 4

It is calculated on yearly basis. However, Since you have moved from one company to another, while changing the company, your tax calculation will be divided into two. You cannot club both of them to get greater HRA benifit.

Answer 5

The HRA is calculated on a yearly basis but is pro-rated - in the sense if you have worked for 3 months and 10 days in firm A, they will look at HRA exemption for only 10 days in 3rd month. The remaining 20 days or whatever in that month is pro-rated in firm B.

The HRA exemption is the minimum of the following:

1.a. 50% of (basic+DA) if working in one of 4 Metros

   b. 40% of (basic+DA) if working elsewhere

2. 10% of [actual rent paid - (basic+DA)]

3. Total HRA paid to you

This exemption is "0" if the salary structure does not have the component "HRA' explicitly in it.

You can download the IT calculator from http://prrajan-tax.blogspot.com/2008/03/... for your reference.

Answer 6

yearly basis