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 amounts.

2. How Does the Calculator Work?

The calculator uses the HRA exemption formula:

Where:

• Rent Paid - Actual rent paid minus 10% of salary
• 50% or 40% of Salary - 50% for metro cities (Delhi, Mumbai, Chennai, Kolkata), 40% for other cities
• HRA Received - Actual HRA received from employer

Explanation: The exemption is the least of these three amounts to ensure fair tax benefits.

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, your basic salary plus DA, HRA received from employer, and select whether you live in a metro city or not. All values must be in INR.

5. Frequently Asked Questions (FAQ)

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

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

Q3: Is rent receipt required for HRA exemption?
A: Yes, you should maintain rent receipts as proof, especially if your annual rent exceeds ₹1 lakh.

Q4: Can I claim HRA exemption if I don't receive HRA from employer?
A: No, the exemption is only available against actual HRA received.

Q5: How does the 10% of salary component work?
A: This is a standard deduction from your rent paid before calculating exemption. It represents the minimum expected housing expense.