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 Does the Calculator Work?

The calculator uses the HRA exemption formula:

Where:

• Rent Paid — Actual rent paid minus 10% of salary
• 50% of Salary — For metro cities (Delhi, Mumbai, Chennai, Kolkata)
• 40% of Salary — For non-metro cities
• 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 and lower tax liability for salaried individuals living in rented accommodations.

4. Using the Calculator

Tips: Enter actual rent paid, your basic salary plus DA, HRA received from employer, and select whether you live in a metro or non-metro city. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What documents are needed to claim HRA exemption?
A: Rent receipts (with landlord PAN if rent exceeds ₹1 lakh annually) and rent agreement may be required as proof.

Q2: Can I claim HRA if I live with my parents?
A: Yes, if you pay rent to them and have proper documentation, but they may need to declare this rental income.

Q3: What if my actual rent is higher than HRA received?
A: You can only claim exemption up to the HRA received amount, even if other components are higher.

Q4: Are there any special rules for leased properties?
A: For leased properties, you might need additional documents like the lease agreement and owner's PAN (if applicable).

Q5: Can I claim HRA if I own a house in another city?
A: Yes, if you're living in a rented accommodation in a different city for employment purposes.