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HRA Calculation in Excel

Before using Excel to compute it for a basic wage, we need to understand what HRA implies. It alludes to the House Rent Allowance in its entirety. In essence, we receive a portion of our gross pay in addition to our base pay and other benefits. It only applies to us when we rent an apartment. To take advantage of the HRA exemption during yearly tax payments is the ultimate purpose of calculating HRA on basic salary.

Calculate HRA on Basic Salary in Excel Using These 3 Easy Steps

Three quick and simple ways are available in Excel to compute HRA on basic income.

Once we have the three outcomes, the least amount of HRA will be determined as the ultimate output. We build up a dataset of an employee's pay slip to start the computation. The Earnings sectors are shown in Cells B12:C14, their respective amounts and the overall salary for July.

HRA Calculation in Excel

We will now use the following three ways in Excel to compute HRA on basic salary:

Method 1: Using Excel, Calculate the Actual HRA based on a Basic Salary

The amount the employer pays the employee each month, in addition to the base wage, is the actual HRA. This is how we determined the actual HRA based on base pay for one year or 12 months using Excel:

  • The basic pay and HRA you received in July should be entered in cells C5 & C6, respectively.
    HRA Calculation in Excel
  • Afterwards, multiply cell C5 by 12 in cell D5 using this straightforward multiplication formula to determine the annual base pay. Refer to the screen grab.

HRA Calculation in Excel
  • Utilizing the identical formula, multiply cell C6 with 12 or just drag cell D5's lower right corner to cell D6. The result of the multiplication will appear automatically.
    HRA Calculation in Excel
  • Finally, enter the following formula into cell D7 to determine the real HRA for basic pay over a year.

HRA Calculation in Excel
  • We have actual HRA for basic salary, and that's it.
HRA Calculation in Excel

Method 2: Determine HRA using Basic Salary and Annual House Rent

We will compute HRA using Excel in the second technique, which is based on annual housing rent and base pay. The formula that follows is as follows:

These easy methods will help us examine the computation now:

  • In cells C5 and C6, enter the basic salary and rent amount first.
    HRA Calculation in Excel
  • The annual salary and housing rent amount are then determined by multiplying cell C5 by 12 in cell D5 using a basic multiplication formula.

HRA Calculation in Excel
  • In cell D6, compute the annual home rent using the same formula.

HRA Calculation in Excel
  • Enter this calculation in cell D7 to get the annual HRA, including the base salary and rent

HRA Calculation in Excel
  • At last, we could compute HRA using the annual rent and basic pay.
HRA Calculation in Excel

Method 3: Utilise Excel to obtain HRA at 50% of the basic pay

Using 50% of the base pay as a starting point is the final way for calculating HRA. Now, let's follow the steps below:

  • Utilizing the identical multiplication procedure in cell D5, first compute the annual basic salary.
    HRA Calculation in Excel
  • The HRA will be calculated using 50% of your base income if you provide the following formula in cell D6.

HRA Calculation in Excel
  • Ultimately, we finished using Excel to calculate the HRA on a 50% basic pay.
    HRA Calculation in Excel

How to Determine Excel's HRA Exemption

After determining the three HRA amounts required to be exempt from paying taxes, we will now compute the minimum HRA amount required. The above data make it clear what the minimal amount is. If not, we can proceed with the following procedure:

  • Fill in cells C5, C6, and C7 with the quantities we estimated.
    HRA Calculation in Excel
  • Next, use this formula to determine the lowest possible HRA.

HRA Calculation in Excel
  • This total represents the HRA based on base pay. When taxes are paid, rom the total amount will be subtracted due.
    HRA Calculation in Excel

Points to Keep in Mind

We need to consider the following while calculating HRA on a basic salary:

  • Make sure your calculations are based on basic pay rather than gross pay.
  • Privately owned housing is not covered by HRA.
  • The calculation of HRA exclusion is always done annually.

Next TopicImprove your Excel





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