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 values, ensuring the benefit doesn't exceed any of these limits.

3. Importance of HRA Exemption

Details: Proper calculation of HRA exemption can significantly reduce taxable income, leading to lower tax liability. It's especially beneficial for employees living in rented accommodations in metro cities.

4. Using the Calculator

Tips: Enter all amounts in INR. Rent paid should be the actual amount paid (after deducting any refunds). Salary means basic salary plus dearness allowance (if part of retirement benefits).

5. Frequently Asked Questions (FAQ)

Q1: Which cities are considered metro for HRA?
A: Only Delhi, Mumbai, Chennai, and Kolkata qualify for the 50% limit. All other cities use 40%.

Q2: Can I claim HRA if I live in my own house?
A: No, HRA exemption is only available if you're paying rent for accommodation.

Q3: What documents are needed for HRA claim?
A: Rent receipts (with landlord PAN if rent exceeds ₹1 lakh annually) and rent agreement may be required.

Q4: Can I claim HRA if I pay rent to my parents?
A: Yes, but they must declare this rental income in their tax return, and you must have proper documentation.

Q5: Is there any minimum rent requirement?
A: No minimum, but exemption is only available for actual rent paid (after deducting 10% of salary).