HRA Calculator – Online House Rent Allowance Calculation, Formula

HRA Online Calculator 2023 after 7th CPC

House Rent Allowance (HRA) is a well-known aspect of salary packages in India which assists employees in covering their rental expenses. HRA receives tax exemptions up to a certain limit, making it an appealing addition to the overall package. An employee’s HRA allocation depends on several factors such as their salary, residence location, and the rent paid for their dwelling.

In India, the HRA amount is a percentage of the employee’s basic salary that differs by city, granting higher percentages for those living in metropolitan areas. The actual reimbursement amount is limited to the HRA percentage of basic salary and dependent on the rent paid. It should be noted that in order to claim HRA, employees must provide proof of rental payments on a residential property.

What is the meaning of HRA?

Employers offer HRA as a component of an employee’s salary to help with expenses related to renting a home. To qualify for HRA exemption, it is required to have a rented residence. The exemption of HRA is governed by Section 10(13A) and Rule 2A of the Income Tax Act, 1961.

What is House Rent Allowance in Salary?

The HRA is designed to assist employees in paying for their living expenses while working in the city. Although it is considered part of your salary, only a part of the HRA is not taxable according to Section 10 (13A) of the IT Act of 1961, depending on certain conditions. Employers establish the amount of HRA based on factors such as salary structure, compensation level, and the employee’s city of residence. You can talk to your employer to ensure that you receive the full tax benefits permitted by the Income Tax Act.

What is the current rates of HRA?

The rates for HRA are subject to alterations based on the percentage of Dearness Allowance (DA), and are presently recommended by the 6th Central Pay Commission. Those residing in Class X cities are offered 30% of basic pay + grade pay + military service pay + NPA, while inhabitants of Class Y and Class Z cities receive 20% and 10% respectively. However, once the DA surpasses 25%, the HRA rates will be adjusted to 27%, 18%, and 9% for X, Y, and Z class cities respectively. If the DA continues to rise and crosses the 50% mark, further modifications will be made, with rates changing back to 30%, 20%, and 10%.

What are the benefits of HRA for Govt Employees?

The rent allowance provided to Central Government employees, known as House Rent Allowance (HRA), covers their rental housing expenses and is a significant component of their compensation package. The HRA rates differ depending on the city classification, which are divided into three categories- X, Y, and Z. Effective from July 1st, 2021, the HRA rates for each class of cities have been modified to 9%, 18%, and 27% for Z, Y, and X class cities, respectively. To calculate the HRA in an employee’s salary, employers allocate a specific part of their basic salary based on their city’s classification. For instance, if the basic salary is Rs. 49,000, the HRA of an employee in X, Y and Z-class cities will be 27% (Rs. 13,230), 18% (Rs.8,820), and 9% (Rs.4410), respectively.

When will increase HRA to 30 percent?

The House Rent Allowance (HRA) for Central Government Employees underwent a revision on July 1, 2021, and another one is expected in 2024 when the DA percentage mark of 50% is attained. As per a memorandum by the Department of Personnel and Training, the HRA will be raised from 27 percent to 30 percent only when the dearness allowance increase reaches at least 50 percent. Upon crossing the 50% DA mark, the HRA will become 30%, 20%, and 10% respectively. Additionally, when the DA surpasses 25%, the HRA in X, Y, and Z cities will be increased to 27%, 18%, and 9% of Basic Pay. Subsequently, it will be raised to 30%, 20%, and 10% of Basic Pay in those cities when the DA reaches 50%.

What is the minimum rate of HRA?

The increase in minimum HRA will have a positive impact on over 700,000 employees. The updated HRA rates for X-class cities will not fall below Rs. 5400, while those for Y-class cities will not fall below Rs. 3600, and Z-class cities will have a minimum of Rs. 1800. It is worth noting that the minimum HRA is set at Rs. 1800, which equates to 10% of the minimum basic pay.

Classification of Cities for HRA after 7th CPC

The 7th Pay Commission has categorized Indian cities into three groups, namely X Cities, Y Cities, and Z Cities, based on population. You can find the State-wise list of X, Y, and Z class cities in the table below. For HRA purposes, X and Y class cities and towns are eligible for 24% and 16% HRA respectively, while other cities fall under the Z class.
If you’re looking for HRA classification for Andhra Pradesh and Telangana, Hyderabad falls under X Cities with a 24% HRA, while Vijayawada, Warangal, Greater Visakahapatnam, Guntur, and Nellore are categorized as Y Cities with a 16% HRA. Assam’s only Y city is Guwahati, while Patna is the only Y city in Bihar.
S.A.S. Nagar, Mohali, and Chandigarh are the only two cities in Chandigarh and are both classified as Y Cities with a 16% HRA. Chhattisgarh’s two Y cities are Durg-Bhilai Nagar and Raipur.
Delhi is the only X city in Delhi, with a 24% HRA. Ahmedabad is the only X city in Gujarat, while Vadodara, Surat, Bhavnagar, Jamnagar, and Rajkot are Y cities with a 16% HRA. Haryana has Faridabad and Gurgaon, which are Y cities with a 16% HRA.
Jammu & Kashmir’s Y cities are Srinagar and Jammu, while Jharkhand’s Y cities are Jamshedpur, Dhanbad, Ranchi, and Bokaro Steel City.
In Karnataka, Bangalore/Bengaluru is an X city with a 24% HRA, whereas Belgaum, Hubli-Dharwad, Mangalore, Mysore, and Gulbarga are Y cities with a 16% HRA. Kerala’s Y cities include Kozhikode, Kochi, Thiruvananthapuram, Thrissur, Malappuram, Kannur, and Kollam.
Gwalior, Indore, Bhopal, Jabalpur, and Ujjain are all Y cities in Madhya Pradesh. Maharashtra has only two X cities – Greater Mumbai and Pune, and the remaining cities such as Amravati, Nagpur, Aurangabad, Nashik, Bhiwandi, Solapur, Kolhapur, Vasai–Virar City, Malegaon, Nanded-Vaghela, and Sangli are Y cities with a 16% HRA.
Odisha’s Y cities are Cuttack, Bhubaneswar, and Raurkela, and Puducherry/Pondicherry is a Y city in Puducherry. Punjab’s Y cities include Amritsar, Jalandhar, and Ludhiana.
Rajasthan’s Y cities are Bikaner, Jaipur, Jodhpur, Kota, and Ajmer, while Tamil Nadu’s Salem, Tiruppur, Coimbatore, Tiruchirappalli, Madurai, and Erode are Y cities with a 16% HRA, and Chennai is the only X city in Tamil Nadu.
In Uttar Pradesh, the Y cities are Moradabad, Meerut, Ghaziabad, Aligarh, Agra, Bareilly, Lucknow, Kanpur, Allahabad, Gorakhpur, Varanasi, Saharanpur, Noida, Firozabad, and Jhansi, while Uttarakhand has only one Y city, Dehradun. As for West Bengal, Kolkata is the only X city, but Asansol, Siliguri, and Durgapur are Y cities with a 16% HRA. Note that Saharanpur became a Y class city with effect from June 2011.

HRA Exemption from Income Tax

Do you receive HRA (House Rent Allowance) as a salaried employee and wish to claim an exemption from Income Tax? The good news is that you can claim an exemption under Income Tax Rules 10(13A) and Rule 2A. You’re eligible for the exemption on the minimum of the following amounts: 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. However, you won’t be eligible for the exemption on HRA if you live in your own house or don’t pay any rent. You can determine the exact amount of exemption you can claim by using our HRA Exemption Calculator. With our calculator, you can enjoy a tax-free income with HRA exemption.

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• Cabinet Today Approved 4% DA Hike from Jan 2023 – Check Salary Hike Details
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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