1. What is HRA Deduction?

The House Rent Allowance (HRA) deduction is a tax benefit available to salaried individuals in India 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:

• Actual HRA — HRA received from employer
• 50% or 40% of Salary — Based on metro/non-metro city
• Rent Paid - 10% of Salary — Excess rent paid over 10% of salary

Explanation: The deduction is the least of these three amounts, ensuring you get the maximum permissible benefit without exceeding limits.

3. Importance of HRA Deduction

Details: HRA deduction can significantly reduce your taxable income, especially for those living in high-rent areas. It's one of the most substantial tax-saving components for salaried individuals.

4. Using the Calculator

Tips: Enter all amounts in INR. For accurate results, use actual HRA received from your payslip, basic salary (not total CTC), and total rent paid for the financial year.

5. Frequently Asked Questions (FAQ)

Q1: Which cities are considered metro?
A: Delhi, Mumbai, Kolkata, and Chennai are classified as metro cities. All others are non-metro.

Q2: Can I claim HRA if I live in my own house?
A: No, HRA exemption is only available for rented accommodation. However, you may claim home loan benefits separately.

Q3: What documents are needed for HRA claim?
A: Rent receipts, rental agreement, and possibly landlord's PAN if annual rent exceeds ₹1 lakh.

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

Q5: How is HRA treated if I change jobs?
A: You can claim HRA from all employers, but the total deduction cannot exceed the limits calculated on your total salary.