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 partial exemption of HRA received as part of salary from taxable income.

2. How Does the Calculator Work?

The calculator uses the HRA deduction formula:

Where:

• Actual HRA — HRA received from employer
• 50% Salary — For metro cities (Delhi, Mumbai, Chennai, Kolkata)
• 40% Salary — For non-metro cities
• Rent Paid - 10% Salary — Excess rent paid over 10% of salary

Explanation: The deduction is the least of these three amounts, ensuring fair tax benefit.

3. Importance of HRA Calculation

Details: Proper HRA calculation helps maximize tax savings while remaining compliant with income tax laws. It's one of the most significant tax-saving components for salaried individuals.

4. Using the Calculator

Tips: Enter actual HRA received, basic salary, actual rent paid, and select whether you live in a metro city. 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 qualify for 50% calculation. All others use 40%.

Q2: Can I claim HRA if I live with my parents?
A: Yes, if you pay rent to them and have proper rent receipts. The amount should be reasonable.

Q3: What documents are needed for HRA claim?
A: Rent receipts, rent agreement (if annual rent exceeds ₹1 lakh), and landlord PAN (if rent exceeds ₹1 lakh per annum).

Q4: Can I claim HRA if I own a house?
A: No, HRA exemption is only available if you're paying rent for accommodation.

Q5: Is there any limit to HRA exemption?
A: No fixed limit, but the exemption is calculated as per the formula and cannot exceed actual HRA received.