1. What is HRA Exemption?

HRA (House Rent Allowance) exemption is a tax benefit available to salaried individuals in India 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 — Actual rent paid minus 10% of basic salary
• 50% or 40% of Salary — 50% for metro cities, 40% for non-metro cities
• HRA Received — Actual HRA received from employer

Explanation: The exemption is the least of these three values, ensuring taxpayers don't claim more benefit than they're entitled to.

3. Importance of HRA Exemption Calculation

Details: Correct calculation of HRA exemption can significantly reduce taxable income, leading to lower tax liability. It's essential for accurate income tax filing in India.

4. Using the Calculator

Tips: Enter all amounts in INR. For metro cities (Delhi, Mumbai, Kolkata, Chennai), select "Metro (50%)". For other cities, select "Non-Metro (40%)".

5. Frequently Asked Questions (FAQ)

Q1: Which cities are considered metro for HRA exemption?
A: Only Delhi, Mumbai, Kolkata, and Chennai 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 accommodation. If you own the house, you cannot claim this exemption.

Q3: What documents are needed to claim HRA exemption?
A: Typically rent receipts and rent agreement. For annual rent exceeding ₹1 lakh, 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 the 10% of salary calculated?
A: It's 10% of your basic salary plus dearness allowance (if part of retirement benefits).