1. What is HRA Exemption?

House Rent Allowance (HRA) is a component of salary provided by employers to cover rental expenses. A portion of HRA is exempt from tax under Section 10(13A) of the Income Tax Act, 1961, based on certain conditions.

2. How HRA Exemption is Calculated

The HRA exemption is the least of:

Where:

• Rent Paid - Actual rent paid minus 10% of salary
• 50%/40% of Salary - 50% for metro cities (Delhi, Mumbai, Chennai, Kolkata), 40% for others
• HRA Received - Actual HRA received from employer

3. Importance of HRA Exemption

Details: Proper calculation of HRA exemption can significantly reduce taxable income, leading to lower tax liability. It's especially beneficial for employees living in rented accommodations in metro cities.

4. Using the Calculator

Tips: Enter actual rent paid, your basic salary + DA, HRA received from employer, 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 exemption?
A: Only Delhi, Mumbai, Chennai, and Kolkata are considered metro cities for HRA exemption purposes.

Q2: Can I claim HRA exemption if I live in my own house?
A: No, HRA exemption is only available for those living in rented accommodations.

Q3: What documents are needed to claim HRA exemption?
A: Rent receipts and ideally a rent agreement. For annual rent exceeding ₹1 lakh, landlord's PAN is required.

Q4: Can I claim HRA exemption if I pay rent to my parents?
A: Yes, but your parents must show this rental income in their tax return.

Q5: Is there any minimum rent requirement for HRA exemption?
A: No minimum rent, but exemption is calculated as per the formula above.