House Rent Deduction Calculation

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 in India that allows salaried individuals to claim deduction for rent paid. The exemption is calculated as the minimum of three components: actual rent paid minus 10% of salary, 50%/40% of salary (depending on city), or the actual HRA received.

2. How Does the Calculator Work?

The calculator uses the HRA exemption formula:

Where:

Rent Paid — Actual rent paid by the employee
Salary — Basic salary plus dearness allowance
HRA Received — HRA component of salary
50% of Salary — For metro cities (Delhi, Mumbai, Chennai, Kolkata)
40% of Salary — For other cities

Explanation: The formula ensures you get the most beneficial tax exemption while preventing excessive claims.

3. Importance of HRA Exemption

Details: Proper calculation of HRA exemption can significantly reduce taxable income and lower tax liability for salaried individuals living in rented accommodation.

4. Using the Calculator

Tips: Enter all amounts in INR. Rent paid should be the actual amount paid (after deducting any landlord's portion). Salary means basic salary plus dearness allowance. Select metro for Delhi, Mumbai, Chennai, or Kolkata.

5. Frequently Asked Questions (FAQ)

Q1: What documents are needed to claim HRA exemption?
A: Rent receipts (with landlord PAN if rent exceeds ₹1 lakh/year) and rent agreement may be required as proof.

Q2: Can I claim HRA if I live with my parents?
A: Yes, if you pay rent to them and have proper documentation, but they must declare this rental income in their tax return.

Q3: What if my actual rent is higher than the exemption?
A: The difference between actual rent paid and HRA exemption cannot be claimed as deduction under any other section.

Q4: Does owning a home affect HRA exemption?
A: If you own a home in the same city where you're claiming HRA, you cannot claim the exemption for that city.

Q5: How often should I update my HRA declaration?
A: Whenever there's a change in your rent amount or salary structure, you should update your declaration with HR.