1. What is HRA Exemption?

The 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 least of three specified amounts.

2. How Does the Calculator Work?

The calculator uses the HRA exemption formula:

Where:

• \( \text{Rent Paid} \) — Actual rent paid minus 10% of salary
• \( 50\% \text{ or } 40\% \text{ of Salary} \) — Based on metro or non-metro city
• \( \text{HRA Received} \) — Actual HRA received from employer

Explanation: The exemption is the minimum of these three values, ensuring you don't get more benefit than what's reasonable or what you actually receive.

3. Importance of HRA Exemption Calculation

Details: Proper calculation of HRA exemption can significantly reduce your taxable income, leading to lower tax liability. It's essential for accurate income tax filing and to avoid discrepancies with tax authorities.

4. Using the Calculator

Tips: Enter actual rent paid (must be more than 10% of salary), your basic salary + DA, actual HRA received, and select whether you live in a metro city (Delhi, Mumbai, Chennai, Kolkata) or non-metro city.

5. Frequently Asked Questions (FAQ)

Q1: What is considered a metro city for HRA exemption?
A: Only Delhi, Mumbai, Chennai, and Kolkata are considered metro cities for HRA exemption purposes. All other cities are non-metro.

Q2: Can I claim HRA exemption if I live in my own house?
A: No, HRA exemption is only available if you're paying rent for accommodation. If you live in your own house, you cannot claim this exemption.

Q3: Do I need to submit rent receipts to my employer?
A: Yes, you typically need to submit rent receipts or rent agreement to your employer to claim HRA exemption. For rent payments above ₹1 lakh per year, you may need the landlord's PAN.

Q4: What if my actual rent is less than 10% of salary?
A: In this case, the first component (Rent Paid - 10% of Salary) becomes negative, so your HRA exemption would be zero for that component.

Q5: Can I claim HRA exemption if I don't receive HRA in my salary?
A: No, the exemption is only available if you receive HRA as part of your salary. However, you may be eligible for deduction under Section 80GG if certain conditions are met.