What do mean by House Rent Allowance? House Rent Allowance also known as HRA is given by employer to its employee as a part of their salary. This type of allowance proves to be beneficial for an employee as it reduces the tax liability of employee. Employee can get deduction upto 50% of Salary or @40% of salary depending upon the states in which he resides. Employee can only get deduction if he lives or resides in a rental accommodation.
Employers give financial assistance to their employees by giving them Rent allowance. If an employee stays in his or her house then such tax deduction in regards to House Rent Allowance would not be allowed to him or her.
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