House Rent Calculation Income Tax India

HRA Exemption Formula:

\[ \text{HRA Exemption} = \min\left(\begin{array}{l} \text{Rent Paid} - 10\% \text{ of Salary}, \\ 50\% \text{ of Salary (metro) or } 40\% \text{ (non-metro)}, \\ \text{HRA Received} \end{array}\right) \]

Rent Paid (INR):

INR

Salary (basic + DA in INR):

INR

HRA Received (INR):

INR

City Type:

HRA Exemption (INR):

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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 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 amounts, ensuring the benefit doesn't exceed actual HRA received or become disproportionately large.

3. Importance of HRA Exemption

Details: HRA exemption can significantly reduce taxable income for salaried individuals living in rented accommodations. Proper calculation ensures compliance with tax laws while maximizing legitimate tax benefits.

4. Using the Calculator

Tips:

Enter actual rent paid (even if shared accommodation)
Salary includes basic salary plus dearness allowance (if part of retirement benefits)
Select correct city type (metro/non-metro)
HRA received should be the annual amount from your salary slips

5. Frequently Asked Questions (FAQ)

Q1: What are metro cities for HRA purposes?
A: Only Delhi, Mumbai, Chennai, and Kolkata are considered metro cities. All others are non-metro.

Q2: Can I claim HRA if I live with my parents?
A: Yes, if you pay rent to them and have proper rent receipts. The payment should be through banking channels for amounts above ₹1,00,000 per year.

Q3: What if my rent exceeds ₹1,00,000 per year?
A: You need to provide landlord's PAN if annual rent exceeds ₹1,00,000. Without PAN, the exemption may be disallowed.

Q4: Can I claim HRA if I own a house?
A: Yes, if you're paying rent for another accommodation (e.g., due to job location), but you cannot claim both HRA and home loan benefits for the same property.

Q5: What documents are needed to claim HRA?
A: Rent receipts, rent agreement (if available), and landlord PAN (for high rent cases). Some employers may require proof of rent payment.