Taxation Interview Question:

Tell me how would you calculate House Rent Allowance (HRA)?

Submitted by: Administrator

Minimum of following three amounts is available as HRA exemption:
☛ Actual House Rent Allowance provided by employer to employee.
☛ House Rent paid in excess of 10% of Salary.
☛ 50% of Salary in case House is located in major cities.
For all three conditions mentioned above relevant period is very important. Means if there is any change in Salary, HRA paid to employee, location of rented house and actual rent paid by employee HRA need to calculate from that relevant change Hence one should avoid calculating HRA on annual basis if there is any change in above factors.
Meaning of Salary for calculating HRA (Basic Salary + Dearness allowance if terms of employment so provide + fixed percentage of turnover achieved by employee).
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