HRA Calculation and Exemption Setup

Modified on Thu, 24 Oct at 3:28 PM

House Rent Allowance (HRA) – Exemption calculation and Prorata setup

1. Claiming HRA Exemption

Eligibility: You can claim HRA exemption if:
- HRA is included in your CTC.
- You are paying rent for your residential accommodation.

2. Calculating HRA Exemption

The exemption is the lowest of the following:
- Actual HRA received.
- 50% of [Basic Salary + DA] for employees in metro cities (Delhi, Kolkata, Mumbai, Chennai).
- 40% of [Basic Salary + DA] for employees in non-metro cities.
- Actual rent paid minus 10% of [Basic Salary + DA].

3. HRA Calculation for New Joiners and Left Employees

New Joiners: HRA exemption is calculated from the date of joining.
Left Employees: HRA exemption is calculated until the date of leaving.

Example Calculation for Raghu (Mumbai):

Joining Date: 15-07-2024
Annual Rent: ₹1,00,000 from 01-07-2024 to 31-03-2025
Monthly Rent: ₹15,000

Month	Basic	HRA Received	40/50% Basic	Rent Paid - 10% Basic	Exemption
Apr '24	0	0	0	0	0
May '24	0	0	0	0	0
Jun '24	0	0	0	0	0
Jul '24	27,419	8,333	13,710	12,258	8,333
Aug '24	50,000	8,333	25,000	10,000	8,333
Sep '24	50,000	8,333	25,000	10,000	8,333
Oct '24	50,000	8,333	25,000	10,000	8,333
Nov '24	50,000	8,333	25,000	10,000	8,333
Dec '24	50,000	8,333	25,000	10,000	8,333
Jan '25	50,000	8,333	25,000	10,000	8,333
Feb '25	50,000	8,333	25,000	10,000	8,333
Mar '25	50,000	8,333	25,000	10,000	8,333

This configuration will be working only if below configuration is selected in below navigation else for joining or leaving month also, calculation will happen for entire salary and Rent amount also will be considered for all months.

Payroll and Compliance -> Configuration manager, else exemption will be considered irrespective of Present days in Starting or Leaving month