House Rent Allowance
Salaried employees who live in a rented house can claim the HRA to lower taxes. This can be partially or completely exempt from taxes. The allowance is for expenses related to rented accommodation. If you don’t live in a rented accommodation, this allowance is fully taxable.
| Type of cities | % of HRA |
|---|---|
| X type cities | 30 |
| Y type cities | 20 |
| Z type cities/areas | 10 |
| Type of cities | % of HRA |
|---|---|
| X type cities | 24 |
| Y type cities | 16 |
| Z type cities/areas | 8 |
Classification of cities –
Here is a list of revision of cities classified for house rent allowance:
Cities falling under X (population of 50 lakh & above) category
Hyderabad, Delhi, Ahmedabad, Bengaluru, Greater Mumbai, Pune, Chennai, Kolkata.
Cities falling under Y (population between 5 lakh & 50 lakh) category
Vijaywada, Warangal, Greater Visakhapatnam, Guntur, Nellore, Guwahati, Patna, Chandigarh, Durg-Bhilai Nagar, Raipur, Rajkot, Jamnagar, Bhavnagar, Vadodara, Surat, Faridabad, Gurgaon, Srinagar, Jammu, Jamshedpur, Dhanbad, Ranchi, Bokaro Steel City, Belgaum, Hubli-Dharwad, Mangalore, Mysore, Gulbarga, Kozhikode, Kochi, Thiruvanthapuram, Thrissur, Malappuram, Kannur, Kollam, Gwalior, Indore, Bhopal, Jabalpur, Ujjain, Amravati, Nagpur, Aurangabad, Nashik, Bhiwandi, Solapur, Kolhapur, Vasai-Virar Cty, Malegaon, Nanded-Waghala, Sangli, Cuttack, Bhubaneswar, Raurkela, Amritsar, Jalandhar, Ludhiana, Puducherry, Bikaner, Jaipur, Jodhpur, Kota, Ajmer, Salem, Tirupur, Coimbatore, Tiruchirappalli, Madurai, Erode, Dehradun, Moradabad, Meerut, Ghaziabad, Aligarh, Agra, Bareilly, Lucknow, Kanpur, Allahabad, Gorakhpur, Varanasi, Saharanpur, Noida, Firozabad, Jhansi, Asansol, Siliguri, Durgapur.
Cities classified under Z (population below 5 lakh) category
The remaining cities and towns in various states or union territories which are not covered by under X or Y category of cities come under it.
- HRA is payable with reference to Band Pay + GP +
NPA*, if any but special pay/personal pay not to be included. - In case of re-employed pensioners, portion of pension to be added with actual pay, subject to the total limit of maximum pay scale.
- HRA is admissible during all kind of leave or suspension at the rate admissible before proceeding on leave or suspension for the first 180 days, beyond this period allowance can be claimed by furnishing prescribed certificates. In case of leave with medical certificate admissible up to 8 months.
- If the employee does not join after leave in case of death/invalidation HRA paid will not be recovered but in case of resignation, recovery will be made after accepting of resignation.
- HRA is admissible upto one year in case of deputation abroad and in case deputation exceeds one year, allowance can be drawn on furnishing certificate if the family resides at headquarters.
- HRA will be discontinued, when an employee is provided with government accommodation, from the date of occupation or from the 8th day of allotment whichever is earlier.
- On transfer, it is admissible for eight (8) months only at new station, if Govt. accommodation is retained at old station.
- HRA is admissible to employee living in a house owned by him/his wife/children/parent but HRA is not admissible if an employee lives in accommodation allotted to his wife/ her husband at the same station or shares rent free accommodation with another employees.
* In seventh pay commission for HRA calculations NPA is NOT part of basic pay.
House Rent Deduction –
If any Government employee uses(allotted) govt. accommodation than rent of that place deducted 2% of Basic pay !
Applicable for both Probationary and Permanent employees !
How tax exemption is calculated –
The deduction available is the least of the following amounts:
a. Actual HRA received or
b. 50% of [basic salary + DA] for those living in metro cities (40% for non-metros); or
c. Actual rent paid less 10% of basic salary + DA
