1. What is HRA Exemption?

HRA (House Rent Allowance) is a component of salary provided by employers to cover rental expenses. A portion of HRA is exempt from tax under Section 10(13A) of the Income Tax Act, based on certain calculations.

2. How HRA Exemption is Calculated?

The HRA exemption is the minimum of three values:

Where:

• Actual HRA — The amount received as HRA from your employer
• 50%/40% of Salary — 50% for metro cities (Delhi, Mumbai, Chennai, Kolkata) or 40% for other cities
• Rent Paid - 10% of Salary — The excess of rent paid over 10% of basic salary

3. Importance of HRA Calculation

Details: Correct calculation of HRA exemption can significantly reduce your taxable income and thus your tax liability. It's important to claim the correct exemption amount to avoid issues with tax authorities.

4. Using the Calculator

Tips: Enter your actual HRA received, basic salary, rent paid, and select whether you live in a metro city or not. All values must be in INR and greater than zero.

5. Frequently Asked Questions (FAQ)

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

Q2: Can I claim HRA if I live in my own house?
A: No, HRA exemption is only available for those paying rent for accommodation.

Q3: What if my rent exceeds ₹1 lakh per year?
A: If your annual rent exceeds ₹1 lakh, you need to provide the landlord's PAN to your employer.

Q4: Can I claim HRA exemption without salary?
A: No, HRA exemption is only available for salaried individuals receiving HRA as part of their salary.

Q5: What documents are needed to claim HRA?
A: You need rent receipts and potentially a rent agreement. For rent over ₹1 lakh/year, landlord's PAN is required.