HOUSE RENT ALLOWANCE [SEC.10(13A) AND RULE 2A] – Exemption in respect of house rent allowance is regulated by rule2A. The least of the following is exempt from tax—
- An amount equal to 50 per cent of salary, where the residential house is situated at Bombay, Calcutta, Delhi or Madras and an equal to 40 per cent of salary where the residential house is situated at any other place.
- House rent allowance received by employee in respect of the period during which the rental accommodation is occupied by the employee during the previous year; or
- The excess rent paid over 10 per cent of salary.
OTHER POINTS – The following points should also be kept in view—“SALARY” of the purpose of computation of exemption of exemption means basic salary and includes dearness allowance if terms of employment so provide