1. What is HRA Exemption?

The House Rent Allowance (HRA) exemption is a tax benefit in India that allows salaried individuals to claim exemption on the HRA component of their salary if they live in rented accommodation. The exemption is calculated as the minimum of three specified amounts.

2. How Does the Calculator Work?

The calculator uses the HRA exemption formula:

Where:

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

Explanation: The exemption is calculated as the least of these three values to prevent excessive tax benefits.

3. Importance of HRA Exemption

Details: Proper calculation of HRA exemption can significantly reduce taxable income and tax liability for salaried individuals living in rented accommodation.

4. Using the Calculator

Tips: Enter actual HRA received, basic salary, rent paid, and select whether you live in a metro city (Delhi, Mumbai, Chennai, Kolkata) or non-metro city. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Which cities are considered metro for HRA calculation?
A: Only Delhi, Mumbai, Chennai, and Kolkata qualify for the 50% calculation. All other cities use 40%.

Q2: Can I claim HRA exemption if I live with my parents?
A: Yes, if you pay rent to your parents and can provide rent receipts. The payment should be through proper banking channels.

Q3: What documents are needed to claim HRA exemption?
A: Rent receipts, rent agreement (if annual rent exceeds ₹1 lakh), and landlord's PAN (if annual rent exceeds ₹1 lakh).

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

Q5: Is there any maximum limit for HRA exemption?
A: No fixed limit - the exemption depends on your salary, actual HRA, rent paid, and city type.