1. What is HRA Exemption?

HRA (House Rent Allowance) exemption is a tax benefit available to salaried individuals in India who live in rented accommodation. The exemption is calculated as the minimum of three specified components related to rent paid, salary, and HRA received.

2. How Does the Calculator Work?

The calculator uses the HRA exemption formula:

Where:

• Rent Paid — Actual rent paid minus 10% of salary
• 50%/40% of Salary — 50% for metro cities (Delhi, Mumbai, Chennai, Kolkata), 40% for others
• HRA Received — Actual HRA received from employer

Explanation: The exemption is the least of these three values, ensuring the tax benefit doesn't exceed any of these limits.

3. Importance of HRA Exemption

Details: Proper calculation of HRA exemption can significantly reduce taxable income, leading to lower tax liability. It's especially valuable for employees living in high-rent areas.

4. Using the Calculator

Tips: Enter all values in INR. Rent paid should be the actual amount paid (after deducting any landlord reimbursements). Salary means basic salary plus dearness allowance (if applicable).

5. Frequently Asked Questions (FAQ)

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

Q2: Can I claim HRA if I live in my own house?
A: No, HRA exemption is only available for rented accommodation. However, you may be eligible for home loan benefits.

Q3: Is rent receipt required for HRA exemption?
A: For rent up to ₹1 lakh/year, declaration may suffice. For higher amounts, rent receipts and possibly landlord PAN are required.

Q4: What if my rent exceeds ₹50,000 per month?
A: For monthly rent exceeding ₹50,000, you must report landlord PAN and the exemption may be subject to additional verification.

Q5: Can I claim HRA if I'm paying home loan EMI?
A: Yes, you can claim both HRA (if living in rented house) and home loan benefits (for the owned property), but not for the same property.