House Rent Allowance (HRA)

HHouse Rent Allowance (HRA) – House Rent Allowance (HRA) is a component of a salaried employee’s income provided by an employer to meet rental expenses. For income tax purposes, HRA may be partially or fully exempt from tax under Section 10(13A) of the Income Tax Act, subject to specified conditions and limits. The Assessment Year (AY) is the year in which income earned during the preceding Financial Year (FY) is assessed and taxed. Employees report HRA received during the FY in their income tax returns, and exemptions are calculated in the corresponding AY.

Example: If an employee receives HRA during FY 2022–23 (1 April 2022 – 31 March 2023), the exemption and taxable portion are calculated while filing returns in AY 2023–24