Question

From the following information, compute the taxable amount of HRA for one month of Naresh who resides in Kanpur:

(i) Salary per month Rs. 6,000

(ii) HRA received per month Rs. 500

(iii) Rent paid per month Rs. 900

1. Rs. 500
2. Rs. 300
3. Rs. 400
4. Rs. 200

Answer 1

Correct Answer - Option 4 : Rs. 200

Provision:

House Rent Allowance (HRA) - It is a portion of your salary granted by your employer to cover the costs of rented housing.

Taxable Amount of HRA - According to section 10 (13A) of the income tax act 1961, is allowed as a deduction from a taxable salary. HRA exemption is allowed least of the following:

Particulars

Actual HRA Received 40% of salary (non-metro city) 50% of salary (metro city) Actual rent paid minus 10% of salary

Taxable HRA = Actual HRA Received - HRA Exempted

Analysis:

In the question given above:

Particulars	Amount (Rs.)
Actual HRA Received (given) 40% of salary (non-metro city) = Rs. 6,000 x 40% Actual rent paid minus 10% of salary = Rs. 900 - (Rs. 6,000 x 10%)	500 2,400 300
Exempted HRA	300 (least of the above)

Conclusion:

Taxable HRA = Actual HRA Received - HRA Exempted

= Rs. 500 - Rs. 300

= Rs. 200