HRA - Housing Rent Allowance

HRA means Housing Rent Allowance. This term is applicable to Indians. If you are located in India, your salary package may contain additional allowance for to help you pay your housing rent. In most cases government employees have HRA inbuilt in their salary packages and they get HRA if they do not live in government provided cottages or houses.

Do you get HRA? If you do then you can in fact get tax deduction for some portion of HRA that you recieve. The amount of tax deduction you can claim is the least of the following three amounts.

1. The HRA you recieve.
2. Housing rent you pay in excess of your Salary. Here Salary means your Basic salary +Dearness Allowance
3. 50% if your salary if you are living in Mumbai, Chennai, Kolkata or Delhi and 40% otherwise.