1. What is HRA Exemption?

The House Rent Allowance (HRA) exemption is a tax benefit under the Indian Income Tax Act that allows salaried individuals to claim exemption on the HRA component of their salary if they live in rented accommodation.

2. How Does the Calculator Work?

The calculator uses the HRA exemption formula:

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

Explanation: The exemption is the least of these three values, ensuring you don't claim more than what's reasonable or actually received.

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 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 calculation?
A: Only Delhi, Mumbai, Chennai, and Kolkata qualify for the 50% calculation. All other cities use 40%.

Q2: Can I claim HRA if I live with my parents?
A: Yes, if you pay rent to your parents and can provide proof (rent receipts, bank transfers), you can claim HRA exemption.

Q3: What documents are needed to claim HRA?
A: Rent receipts with landlord's PAN (if rent exceeds ₹1 lakh annually), rental agreement, and proof of payment.

Q4: Is there a maximum limit for HRA exemption?
A: No fixed limit - it depends on your salary structure, actual rent paid, and city of residence.

Q5: Can I claim HRA if I own a house?
A: If you own a house in the city where you work, you cannot claim HRA. If you own elsewhere but rent where you work, you can claim.