Housing Allowance Information:
Ninety-eight percent of companies provide HRA as part of the compensation package, either as a fixed amount or calculated as a percentage of basic salary.
Employers offer to meet part of the rental costs of the employee in the form of House Rent Allowance (HRA). This allowance is granted to cover a part or whole of the rent that the employee incurs, and a part of it is exempt from tax for the employee under certain conditions (such as they do not own the house of residence.) Out of HRA received during the year, least of the following three amounts will not be included in the employee's taxable income:
- The amount equal to 50% of annual salary, for persons staying in Mumbai, Chennai, Calcutta or Delhi, but 40%, for others
- The actual amount of house rent allowance received
- The amount of rent actually paid in excess of 10% of annual salary
The (HRA) is a percentage of the employee's basic wage (or pay). The amount of the allowance is determined by the city "category: A-1", "A", "B-1", "B-2" and "C". This classification was initally based on the recommendations of the Fifth Pay Commission of India (1997) and was later revised based on the results of the 2001 Census of India. Employee's residing in category A cities (e.g., Mumbai, Delhi) may receive an additional 40% of their basic pay as their housing rent allowance (HRA). Employee's residing in category B cities may receive an additional 30% HRA. And employee's residing in category C cities may receive an additional 20-25% HRA.
** I did not have market data on education allowance but note that there are other allowances that are common in India such as a leave travel and dearness allowance