Tax time - HRA Tax exemption

Tax time is here. !!!

Every company starts with collecting tax proof in January. And that’s when everyone start thinking about tax saving. Most of us don’t know how those taxes are applied. I was surfing the internet to find out on how the HRA are applied. Then I came across this information. This is from one of my friend Sarajit Datta who is also investment consultant. Below is some extract from his recent blog.

HRA Exemption in Non-Metro Cities:

For example let’s say
• Yearly HRA = Rs 1,20,000
• Yearly Basic = Rs 2,00,000
• Yearly Rent = Rs 1,20,000

As per the HRA formula -
1. Yearly HRA = Rs 1,20,000
2. Yearly Basic X 40% = 2,00,000 X 40% = Rs 80,000
3. Yearly Rent - (Yearly Basic) X 10% = 1,20,000 – 2,00,000 X 10% = Rs 1,00,000..[more]