The amount of rent actually paid in excess of 10% of annual salary?

Question

Please explain the above statement in terms of HRA Exemption ( What is the meaning of excess of 10% of annual salary)

Answer 1

If "Rent" is the rent paid per annum, then the HRA exemption limit is:

Rent - [(BASIC+DA)*10%]

Answer 2

In case Rent paid is 5000 per month.Basic Pay is 20000 p.m.

Then figure for rent actually paid in excess of 10% of annual salary shall be

(5000*12)-10% of (20000*12)

=60000-24000

=36000

Answer 3

I think people are interpreting the meaning of salary in a wrong manner.Actually salary for the purpose of HRA exemption does not refer to Basic Salary only. Salary for this purpose means salary for retirement benefits (SRB)  i.e. BASIC salary, DEARNESS ALLOWANCE and COMMISSION received on SALES. Suppose you get HRA for 6 months and the rent paid by you is Rs.4500 p.m. Now to avail exemption you have to calculate the SRB for 6 months. Let's assume that ur SRB for this time period is Rs.250000. Now 10% of Rs.250000 is Rs.25000. The rent paid for 6 months is(4500*6)=Rs.27000. So here the amount of RENT actually paid in excess of 10% of SRB i.e.salary for retirement benefits is Rs.(27000- 25000)=Rs. 2000.

Answer 4

Very simple!  Following example will serve you;

a.  Suppose your annual salaries are Rs.  2,00,000/-

b.  Ten percent of above                       Rs.    20,000/-

c.   Annual Rent actually paid by you.   Rs.    30,000/-

d.   paid in excess of 10% of annual

      salary    (c-b)                                     Rs.   10,000/-

Answer 5

a salaried person is supposed to incur upto 10% of his salary towards payment of his rental liability. so if he pays not more than 10% of salary toward rent, the house rent allowance paid to him is not exempt. the exemption of hra fro income tax is limited to the amount of rent paid by the employee towards his rental liability. this condition is apart from other conditions governing exemption of hra.

Answer 6

The statement you have posted has an error. The actual statement reads as 10% of Basic salary and NOT 10% of annual salary.

Check again and you'll come to know the truth after which you can go ahead and choose this as the best answer - for removing the confusion.