House Rent Allowance Calculation Tool

HRA Online Calculator 2023 after 7th CPC

HRA is a common inclusion in the salary package of Indian employees which aids them in covering rent expenses. This component is tax-free up to a certain limit, making it an appealing aspect of the salary structure. The amount of HRA an employee receives depends on their city of residence, rental rate, and salary.

In India, the HRA value is based on a percentage of the employee’s basic salary, which differs by city – higher percentages are available for those residing in metropolitan areas. The actual HRA value is determined by the rental fee paid, which cannot exceed the HRA percentage of the basic salary. In order to be eligible for HRA, an employee must reside in a rented property and provide rental evidence to their employer.

What is the meaning of HRA?

Organizations offer their staff an HRA as a component of their pay to support them financially with rental accommodations. Meeting the criteria for exemption on HRA necessitates occupying rented housing. The exemption falls under the purview of Section 10(13A) and Rule 2A of the Income Tax Act of 1961.

What is House Rent Allowance in Salary?

The HRA serves as a perk for employees which covers their living expenses in the city of their employment. The HRA is included in an employee’s salary, but under certain conditions, a part of it can be tax-exempted as per Section 10 (13A) of the IT Act of 1961. The amount of HRA that an employee receives depends on various factors like their compensation level, salary structure, and city of residence. It is suggested to have a conversation with employers to ascertain that they receive the highest tax benefits permissible under the Income Tax Act.

What is the current rates of HRA?

The rates for HRA (House Rent Allowance) may vary depending on the Dearness Allowance (DA) percentage. As per the 6th Central Pay Commission proposal, residents of Class X cities can avail 30% of basic pay along with grade pay, military service pay, and NPA, while individuals residing in Class Y and Z cities are eligible for 20% and 10%, respectively. Nevertheless, if the DA rises above 25%, the HRA rates will be revised to 27%, 18%, and 9% for X, Y, and Z-class cities, correspondingly. Further adjustments will be made when the DA exceeds 50%, thereby restoring the rates to 30%, 20%, and 10% for X, Y, and Z ranges, respectively.

What are the benefits of HRA for Govt Employees?

The House Rent Allowance (HRA) is a crucial aspect of the remuneration package for Central Government personnel as it caters to the expenses of rental housing. HRA rates are divided into three categories, namely X, Y, and Z, based on city classification. Commencing from July 1st, 2021, HRA rates have undergone changes to 9% (Z Class), 18% (Y Class), and 27% (X Class) for specific cities. The employers deduce a fraction of their employee’s basic salary towards this allowance determined by the employee’s location. The computation of HRA as part of the employee’s salary is a relatively uncomplicated process. For instance, if an employee’s basic pay is Rs. 49000, the HRA entitlement would be Rs. 13230 (27%), Rs. 8820 (18%), and Rs. 4410 (9%) based on the city where the employee resides.

When will increase HRA to 30 percent?

The House Rent Allowance (HRA) for Central Government employees was recently revised on July 1, 2021. Another update is set to happen in 2024 when the dearness allowance(DA) percentage reaches 50%. In the event of this DA increase, the HRA will be raised from its current rate of 27% to 30%. As per a recent memorandum from the Department of Personnel and Training, the HRA will reach 30%, 20%, and 10% respectively, contingent on the DA crossing 50%. If the DA surpasses 25%, an increase in HRA will also apply to Basic Pay in X, Y, and Z cities. The newly revisited rates will be 27%, 18%, and 9% respectively. The HRA will then further increase to 30%, 20%, and 10% when the DA percentage hits 50% in the same cities.

What is the minimum rate of HRA?

The new minimum HRA rates will provide a boost to more than 700,000 employees. The rates have been raised to at least Rs. 5400 in X-class cities, Rs. 3600 in Y-class cities, and Rs. 1800 in Z-class cities. It’s important to note that the minimum HRA amount has been set at Rs. 1800, which is equal to 10% of the minimum basic pay.

Classification of Cities for HRA after 7th CPC

The 7th Pay Commission determines the classification of cities for HRA based on population records. Indian cities are divided into three categories: X, Y, and Z cities. The State-wise list of cities can be found in the table below. X and Y class cities are eligible for 24% and 16% HRA, respectively, while other cities fall under the Z class.

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

Chandigarh and S.A.S. Nagar, Mohali are the only two cities in Chandigarh, both of which are classified as Y cities with a 16% HRA. Durg-Bhilai Nagar and Raipur are the two Y cities in Chhattisgarh. Delhi is the only X city in Delhi, with 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 with a 16% HRA in Haryana. Srinagar and Jammu are Y cities with a 16% HRA in Jammu & Kashmir.

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. Kozhikode, Kochi, Thiruvananthapuram, Thrissur, Malappuram, Kannur, and Kollam are Y cities in Kerala.

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.

Cuttack, Bhubaneswar, and Raurkela are the Y cities in Odisha. Puducherry/Pondicherry is a Y city in Puducherry. 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. Moradabad, Meerut, Ghaziabad, Aligarh, Agra, Bareilly, Lucknow, Kanpur, Allahabad, Gorakhpur, Varanasi, Saharanpur, Noida, Firozabad, and Jhansi are all Y cities in Uttar Pradesh.

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

Discover How to Compute HRA Exemption on Income Tax: If you’re a salaried worker seeking to receive an exemption from Income Tax for your HRA (House Rent Allowance), you’re in for good news! You can claim an exemption on the following smallest amount, in line with Income Tax Rules 10(13A) and Rule 2A:
– Actual HRA obtained in your salary
– 40% of your salary (Basic Pay + DA) intended for Non-Metros
– 50% of your salary (Basic Pay + DA) for Metros such as Mumbai, Calcutta, Delhi, or Chennai
– Rent paid minus 10% of your salary
If you’re residing in your own house or not paying any rent, you won’t be entitled to the exemption on HRA. However, do not worry! Our HRA Exemption Calculator is available to assist you in determining the specific amount of exemption you may request. Therefore, use our calculator right away and receive 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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What is HRA for government employees in India?

HRA stands for House Rent Allowance and it is a part of the salary of government employees in India.

What is the minimum rate of HRA for government employees in India?

The minimum rate of HRA for government employees in India is Rs. 1620.

Who is eligible to receive HRA?

All Central Government employees in India are eligible to receive HRA.