Normally, HRA exemption depends on your salary; place of residence; rent paid & lastly the HRA received
My HRA is Rs 10,000 per month, but I was paying Rs 12,000 as rent for the house I was living in Delhi. I have now moved to Meerut, where the rent I pay is Rs 10,000 a month. But now I am getting lesser HRA exemption than before. Can you tell me the factors on which HRA exemption depends?
Rohit Bansal, Meerut
The confusion that you have is understandable. And, when you know the factors impacting HRA exemption, you will understand why it is so better. Normally, the HRA exemption depends on four factors -- your salary which constitutes of only basic pay plus dearness allowance; your place of residence; the rent paid; lastly the HRA received. The exemption amount would change if any of the above factors change, such as an increase in salary, or an increase in HRA amount, or the change of the city of residence, or change in the rent paid. The deduction is the least of the HRA amount received, or the rent paid in excess of 10 per cent of the salary, or 50 per cent of the salary for metros, or 40 per cent of the salary for cities other than metros. In your case, the exemption will change since you have changed residence from Delhi to Meerut.