The exemption with respect to HRA is based upon the following factors?

(A) Rent paid

(B) Place of Residence

(C) Salary

(D) HRA Received

(E) Fair Rent

(F) Market Rent

Choose the most appropriate answer from the options given below:

The correct answer is (A), (B), (C), (D) only

Key Points House Rent Allowance (HRA):

• HRA, or House Rent Allowance, is a salary portion given by employers to employees to cover housing expenses involved with renting a home.
• A person's compensation includes HRA as a key component.
• Both salaried employees and self - employed persons are covered by HRA.

Important Points Factors that affect HRA Calculation:

• Salary
• HRA Received
• Actual rent paid
• City of residence (metro, non-metro or rural)

Exemption for HRA:

The exemption on HRA is calculated as per 2A of Income Tax Rules. As per Rule 2A, the least of the following is exempted from salary under Section 10(13A) and does not form part of the taxable income.

• Actual HRA received from employer
• For those living in metro cities: 50% of (Basic salary + Dearness allowance)
• For those living in non-metro cities: 40% of (Basic salary + Dearness allowance)
• Actual rent paid minus 10% of (Basic salary + Dearness allowance)