1. What is HRA Deduction?

The House Rent Allowance (HRA) deduction is a tax benefit available to salaried individuals in India who live in rented accommodation. It allows you to claim exemption on part of your HRA component to reduce taxable income.

2. How Does the Calculator Work?

The calculator uses the HRA deduction formula:

Where:

• Actual HRA — HRA received from employer
• 50% Salary — For metro cities (Delhi, Mumbai, Chennai, Kolkata)
• 40% Salary — For non-metro cities
• Rent Paid - 10% Salary — Excess of rent paid over 10% of salary

Explanation: The deduction is the least of these three amounts, ensuring you claim only the legitimate tax benefit.

3. Importance of HRA Calculation

Details: Proper HRA calculation helps maximize tax savings while remaining compliant with income tax laws. It's one of the most significant tax-saving components for salaried individuals.

4. Using the Calculator

Tips: Enter actual HRA received, basic salary, total rent paid, and select whether you live in a metro city. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What are considered metro cities for HRA?
A: Only Delhi, Mumbai, Chennai, and Kolkata qualify for 50% calculation. All other cities use 40%.

Q2: Can I claim HRA if I live with my parents?
A: Yes, if you pay rent to them and have proper rent receipts. The payment should be via bank transfer for better documentation.

Q3: What documents are needed to claim HRA?
A: Rent receipts, rental agreement (if rent > ₹1 lakh/year), and landlord's PAN (if rent > ₹1 lakh/month).

Q4: Can I claim HRA if I own a house?
A: No, HRA exemption is only available if you're paying rent. However, you can claim home loan interest under Section 24.

Q5: Is there any minimum rent requirement?
A: No minimum, but the deduction is calculated as (Rent Paid - 10% of Salary), so higher rent gives more benefit.