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 components.

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%/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 the benefit doesn't exceed actual HRA received or standard limits.

3. Importance of HRA Calculation

Details: Proper HRA exemption calculation helps maximize tax savings while ensuring compliance with income tax regulations. It's a significant component of salary restructuring for tax optimization.

4. Using the Calculator

Tips: Enter all amounts in INR. For accurate results, use actual rent paid (with rent receipts), basic salary plus DA, and actual HRA received from your salary slip.

5. Frequently Asked Questions (FAQ)

Q1: Which cities are considered metro for HRA calculation?
A: Delhi, Mumbai, Chennai, and Kolkata are classified as metro cities. All others are non-metro.

Q2: Can I claim HRA if I live in my own house?
A: No, HRA exemption is only available for rented accommodation. However, you may be eligible for other deductions like home loan interest.

Q3: What documents are needed to claim HRA?
A: Rent receipts (if rent exceeds ₹1 lakh annually), rent agreement, and sometimes landlord's PAN (if rent exceeds ₹1 lakh per month).

Q4: Can I claim HRA if I don't receive it in my salary?
A: No, HRA exemption is only available against actual HRA received as part of your salary.

Q5: Is there a maximum limit for HRA exemption?
A: No fixed limit - it depends on your salary structure, rent paid, and city of residence.