1. What is HRA Exemption?

HRA (House Rent Allowance) exemption is a tax benefit available to salaried individuals who live in rented accommodation. The exemption is calculated as the minimum of three components: actual HRA received, rent paid minus 10% of salary, or 50%/40% of salary depending on city type.

2. How Does the Calculator Work?

The calculator uses the HRA exemption formula:

Where:

• Rent Paid - Actual rent paid for accommodation
• Salary - Basic salary plus dearness allowance (DA)
• HRA Received - HRA component of salary
• City Type - Metro (50%) or Non-Metro (40%)

Explanation: The exemption is calculated as the least of the three components to ensure fair tax benefits.

3. Importance of HRA Exemption

Details: Proper calculation of HRA exemption can significantly reduce taxable income and lower tax liability for salaried individuals living in rented accommodation.

4. Using the Calculator

Tips: Enter all values in rupees. Rent paid should be the actual amount paid, salary should be basic + DA, and HRA received should be from your salary slip. Select metro for Delhi, Mumbai, Chennai, or Kolkata.

5. Frequently Asked Questions (FAQ)

Q1: What are metro cities for HRA purposes?
A: Only Delhi, Mumbai, Chennai, and Kolkata are considered metro cities (50% of salary). All others are non-metro (40%).

Q2: Can I claim HRA exemption if I live with my parents?
A: Yes, if you pay rent to your parents and can provide rent receipts and proof of payment.

Q3: Is PAN required for landlord for HRA exemption?
A: PAN is required if annual rent exceeds ₹1,00,000. For lower amounts, landlord declaration is sufficient.

Q4: What if my actual rent is higher than HRA received?
A: You can only claim exemption up to the HRA received amount, even if other components are higher.

Q5: Can I claim HRA if I own a house in another city?
A: Yes, if you're living in rented accommodation for work purposes while owning property elsewhere.