HRA calculation in Saral TDS software

Hello, in this post we will learn how to carry out the process of HRA Calculation in Saral TDS.

HRA or House Rent Allowance is a part of the salary component given to the employee to meet the requirement of family shelter. For tax computation purpose, this component is partially taxable.

The taxability of HRA is calculated based on the below steps;

  • Determine the least value out of below 3 steps:
    1. 50%/40%* of (Basic + Dearness Allowance)
    2. Rent Paid – 10% of (Basic + Dearness Allowance)
    3. Actual HRA in salary
  • Reduced the value derived in step one from actual HRA

The resulting value will be taxable HRA for tax computation.

* If the employee is staying in the metro city consider 50% else consider 40%

For Example:

Monthly Basic + Dearness Allowance of the employee is Rs. 20,000

Monthly Rent Paid by the employee is Rs. 8000

Monthly HRA of the employee is Rs. 6500

The employee is residing is Bangalore (Non-metro city)

Calculation:

Step 1:

  1. 40% (20000) = Rs. 8000
  2. 8000 – 10% (20000) = 8000 – 2000 = Rs. 6000
  3. Rs. 6500

The least value is Rs. 6000

Step 2:

  • Rs. 6500 – Rs. 6000 = Rs. 500

Hence, Rs. 500 is taxable and Rs. 6000 is non-taxable out of HRA.

Process of HRA Calculation in Saral TDS

We shall see this process in Saral TDS.

Once you enter the Deductor and Employee details, go to Salary Options under Master and do the required settings. I.e. select the required type of salary entry (Monthly, Quarterly or Yearly). Depending on the type selected, the salary details will be entered in the Tax computation screen.

HRA Calculation in Saral TDS 1

Next, go to Tax Computation under Form 24Q.

HRA Calculation in Saral TDS 2

All the employees entered in Employee Master will be listed on the list of the screen. Select the employee for whom the details have to be entered.

Now, click on the first “…” button which is shown against the Gross Salary field.

HRA Calculation in Saral TDS 3

You will be taken to the Salary Details Tab. Here, enter the salary details like Basic, DA, HRA etc. based on the salary settings done.

HRA Calculation in Saral TDS 4

On entering the Rent Details, the exempt and the taxable HRA will be auto-calculated as per the exemption calculation explained above. If the employee is from Metro city, tick the Metro city check box.

HRA Calculation in Saral TDS 5

Note:

Form FY 2013-14 onwards, if the Rent declaration is above Rs. 1 Lakh per annum (Rs. 8333 per month) then it is mandatory to submit the PAN of the Landlord along with Name and Address proof of Landlord.

To capture these details, go to More Details tab in Tax Computation and enter the relevant details.

HRA Calculation in Saral TDS 6

This ends the post. If you have any questions drop them in the comment section below.

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