HRA exempted Under Section 10(13A) 

As per section 10(13 A) of Income Tax Act, employees who draw HRA from the employer, but  staying in  rented houses can exempt amount up to the ceiling stipulated.  Section 10(13A) acts as a tax saving The amount paid to the employee by the employer as rent, house rent allowance, maintenance charges or brokerage for arranging accommodation etc is treated as the income of the employee.

How is the amount exempted under section 10(13A) calculated?  

Amount of exemption u/s 10 (13A) is least of the following: 

(i) Actual HRA received 
(ii) Rent paid in excess of 10% salary (Salary means Basic Pay plus Dearness Allowance)
(iii) 50% of Salary where the residential house is situated in Mumbai, Kolkata, New Delhi or Chennai and 40% of Salary where the residential house is situated at any other place. 

What is meant by salary under section 10(13A) ?

Salary for this purpose include basic salary, dearness allowance forming part of salary while computing  retirement benefits and commission based on fixed percentage of turnover achieved by the employee. Other than this, any other allowances/perquisites need be considered as part of salary. 

Salary for this purpose is to be computed on due basis in respect of period during which the accommodation is occupied by the employee in the previous year. Hence, any payments not pertaining to the previous year or not pertaining to the period of occupation of the accommodation can be excluded.

What are the obligations on employees claiming exemption u/s 10(13A)?

If annual rent paid by the employee exceeds Rs. 1,00,000 per annum
1.    It is mandatory for the employee to report PAN of the landlord to the employer. 
2.    In case the landlord does not have a PAN, a declaration to this effect from the landlord along with the name and address of the landlord should be submitted by the employee.