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 per Income Tax rules.

2. How Does the Calculator Work?

The calculator uses the HRA exemption formula:

Where:

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

Explanation: The exemption is the least of these three amounts, ensuring the benefit doesn't exceed actual HRA received or specified percentages of salary.

3. Importance of HRA Calculation

Details: Proper HRA exemption calculation helps maximize tax savings while complying with Income Tax regulations. It's a significant component of salary tax planning.

4. Using the Calculator

Tips: Enter actual rent paid, basic salary + DA, HRA received, and select city type (metro/non-metro). All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Which cities are considered metro for HRA?
A: Delhi, Mumbai, Kolkata, and Chennai are classified as metro cities for HRA exemption purposes.

Q2: Is rent receipt required for HRA exemption?
A: Yes, rent receipts should be maintained as proof, especially if annual rent exceeds ₹1 lakh.

Q3: Can I claim HRA if I live in my own house?
A: No, HRA exemption is only available for rented accommodation.

Q4: What if my actual rent is less than 10% of salary?
A: The first component becomes negative, so exemption will be the lower of the other two components.

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