1. What is HRA Exemption?

The House Rent Allowance (HRA) is a component of salary provided by employers to cover rental expenses. A portion of this allowance 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 calculated as the minimum of:

Where:

• Actual HRA — The amount received as HRA from your employer
• 50%/40% of Salary — 50% for metro cities (Delhi, Mumbai, Chennai, Kolkata), 40% for other cities
• Rent Paid minus 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 this exemption properly with proper rent receipts and proof of payment.

4. Using the Calculator

Tips: Enter your actual HRA received, basic salary, total rent paid annually, 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?
A: Only Delhi, Mumbai, Chennai, and Kolkata are considered metro cities for HRA calculation.

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 documents are needed to claim HRA?
A: You need rent receipts and ideally proof of rent payment (bank transfers/cheques) especially for amounts above ₹1 lakh per annum.

Q4: Can I claim HRA if I don't receive it in my salary?
A: No, the exemption is only available against actual HRA received from your employer.

Q5: Is there any limit on HRA exemption?
A: There's no fixed limit - the exemption is calculated as per the formula, but must be supported by actual rent payment proofs.