1. What is HRA Exemption?

HRA (House Rent Allowance) exemption is a tax benefit available to salaried individuals who receive HRA as part of their salary and pay rent for their 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:

• Rent Paid - 10% of Salary — Actual rent paid minus 10% of salary (Basic + DA)
• 50% or 40% of Salary — 50% for metro cities (Delhi, Mumbai, Chennai, Kolkata), 40% for other cities
• HRA Received — Actual HRA received from employer

Explanation: The exemption is the lowest of these three values, ensuring the benefit doesn't exceed any of these limits.

3. Importance of HRA Exemption

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

4. Using the Calculator

Tips: Enter all amounts in Indian Rupees (₹). Rent paid should be the annual amount. Select appropriate city type (metro or non-metro) for accurate calculation.

5. Frequently Asked Questions (FAQ)

Q1: What are considered metro cities for HRA exemption?
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 in my own house?
A: No, HRA exemption is only available for rented accommodations. If you own the house, you cannot claim this exemption.

Q3: What documents are needed to claim HRA exemption?
A: Typically rent receipts and rental agreement. For rent above ₹1 lakh/year, landlord's PAN may be required.

Q4: Can I claim HRA exemption if I don't receive HRA in my salary?
A: No, this exemption is specifically for the HRA component of your salary.

Q5: How is HRA exemption treated in the new tax regime?
A: Under the new tax regime (from FY 2020-21), HRA exemption is not available as most allowances are taxed.