1. What is HRA Exemption?

HRA (House Rent Allowance) exemption is a tax benefit available to salaried individuals in India who receive HRA as part of their salary and pay rent for their accommodation. The exemption is calculated as the minimum of three specified components.

2. How is HRA Exemption Calculated?

The HRA exemption is calculated as the minimum of:

Where:

• Rent Paid - Actual rent paid minus 10% of salary (Basic + DA)
• 50%/40% of Salary - 50% of salary for metro cities (Delhi, Mumbai, Chennai, Kolkata) or 40% for other cities
• HRA Received - Actual HRA received from employer

3. Importance of HRA Exemption

Details: Claiming HRA exemption can significantly reduce your taxable income and thus your tax liability. Proper calculation and documentation (rent receipts) are essential to claim this benefit.

4. Using the Calculator

Tips: Enter your actual rent paid, salary (Basic + DA), HRA received from employer, and select whether you live in a metro city or not. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

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

Q2: Can I claim HRA exemption if I live with my parents?
A: Yes, if you pay rent to your parents and have proper documentation (rent agreement, rent receipts, and proof of payment).

Q3: Is PAN required for landlord if rent exceeds ₹1 lakh annually?
A: Yes, if your annual rent exceeds ₹1 lakh, you need to provide your landlord's PAN to claim HRA exemption.

Q4: What documents are needed to claim HRA exemption?
A: Rent receipts, rent agreement (if available), and proof of payment (bank transfers preferred). For annual rent over ₹1 lakh, landlord's PAN is required.

Q5: Can I claim HRA exemption if I own a house?
A: No, HRA exemption is only available if you're paying rent for accommodation. If you own the house you live in, you cannot claim HRA exemption.