How to calculate income tax rebate due to house rent paid in a year?

Can anybody please explain me how to calculate rebate in income tax payable due to paying house rent as per income tax rules in India? Here is one case:
Mr XYZ receives gross salary of Rs. thirty thousand per month out of which Rs3500 is house rent allowance. He spends Rs3000 per month towards house rent. If we assume he can save income tax for further Rs one lakh (above basic RS 180000 which is not taxable) by paying life insurance premium, investing in mutual fund, PPF etc, what will be his net income tax for the year? (please indicate steps in your argument briefly.)

Also, in case the actual house rent paid is more than the HRA received, say Rs 4000 per month, then what will be the income tax payable for the financial year? Thanks.

2 Replies to “How to calculate income tax rebate due to house rent paid in a year?”

  1. i think you have to submit rent recipt of rupees 3000 than total 3000*12=36000 will be deducted from your gross salary.

    reduce your insurance and other saving and calculate net taxable income.

  2. You should make calculation in following ways.
    Gross Salary 360000.00
    Less- HRA Exemption u/s 10 See note below
    Deduction u/s 80 C 100000.00
    Net Taxable income

    Note- HRA Exemption is least of following
    1- Actual HRA received 42000.00
    2- Rent Paid – 10% of basic Salary *
    3- 40% of Basic Salary *

    * Since you have not provided amount of basic salary, these calcuation is incomplete. Put the amount of basic salary in above calculation and get the reply of your query.

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