1. What is HRA Tax Deduction?

The House Rent Allowance (HRA) tax deduction is a benefit for salaried individuals 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:

• \( \text{Actual HRA} \) — HRA received from employer
• \( \text{Salary} \) — Basic salary component
• \( \text{Rent Paid} \) — Total rent paid annually
• \( 50\% \text{ or } 40\% \) — Based on metro (50%) or non-metro (40%) city
• \( 10\% \text{ Salary} \) — Minimum deduction from rent paid

Explanation: The deduction is the least of three amounts: actual HRA received, percentage of salary, or excess rent paid over 10% of salary.

3. Importance of HRA Calculation

Details: Proper HRA calculation helps maximize tax savings while complying with income tax regulations. It's a significant component of salary tax planning.

4. Using the Calculator

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

5. Frequently Asked Questions (FAQ)

Q1: Which cities are considered metro for HRA?
A: Currently Delhi, Mumbai, Chennai, and Kolkata are considered metro cities for HRA purposes.

Q2: Can I claim HRA 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: What documents are needed to claim HRA?
A: Rent receipts, rental agreement (if rent > ₹1 lakh/year), and possibly proof of payment to landlord.

Q4: Can I claim HRA if I own a house?
A: No, HRA exemption is only available if you're paying rent for accommodation.

Q5: Is there any maximum limit for HRA exemption?
A: No fixed limit - it depends on your salary structure, rent paid, and city of residence.