1. What is HRA Exemption?

HRA (House Rent Allowance) exemption is a tax benefit provided by the Indian Income Tax Department to salaried individuals who receive HRA as part of their salary and pay rent for their accommodation. The exemption amount is calculated as per Section 10(13A) of the Income Tax Act.

2. How is HRA Exemption Calculated?

The HRA exemption is the least of the following three amounts:

Where:

• Rent Paid - 10% of Salary: Actual rent paid minus 10% of basic salary + DA
• 50% or 40% of Salary: 50% of salary if living in metro city (Delhi, Mumbai, Chennai, Kolkata), else 40%
• HRA Received: Actual HRA received from employer

3. Importance of HRA Exemption

Details: Claiming HRA exemption can significantly reduce your taxable income, thereby lowering your tax liability. Proper documentation (rent receipts, rental agreement) is essential when claiming this exemption.

4. Using the Calculator

Tips: Enter all amounts in INR. Rent paid should be the actual amount paid, salary means basic salary plus DA, and HRA received is the component from your salary slip. Select whether you live in a metro city or not.

5. Frequently Asked Questions (FAQ)

Q1: What if I live with my parents and pay them rent?
A: You can claim HRA exemption if you pay rent to your parents, but they must declare this rental income in their tax return.

Q2: Is PAN required for my landlord?
A: PAN is required if annual rent exceeds ₹1,00,000. For lower amounts, landlord declaration is sufficient.

Q3: Can I claim HRA if I own a house?
A: No, you cannot claim HRA exemption if you own the house you live in (except if you own one house and live in another rented accommodation).

Q4: What documents are needed to claim HRA?
A: Rent receipts, rental agreement (if rent > ₹1,00,000 per year), and landlord PAN (if applicable).

Q5: Can I claim HRA for two different houses?
A: No, exemption is allowed only for one rented accommodation at a time.