1. What is HRA Exemption?

The HRA (House Rent Allowance) exemption allows salaried individuals to claim tax benefits on the rent they pay. For AY 2025-26, the exemption is calculated as the least of three amounts: actual HRA received, rent paid minus 10% of salary, or 50%/40% of salary depending on location.

2. How Does the Calculator Work?

The calculator uses the HRA exemption formula:

Where:

• Rent Paid — Actual rent paid minus 10% of basic salary + DA
• 50%/40% of Salary — 50% for metro cities (Delhi, Mumbai, Chennai, Kolkata), 40% for others
• HRA Received — Actual HRA component in salary

Explanation: The calculator determines which of these three amounts is the lowest to calculate your eligible exemption.

3. Importance of HRA Exemption

Details: Proper calculation of HRA exemption can significantly reduce taxable income for salaried individuals living in rented accommodation, leading to substantial tax savings.

4. Using the Calculator

Tips: Enter actual rent paid (after deducting any non-rent components), your basic salary + DA, actual HRA received, and select your city type (metro/non-metro).

5. Frequently Asked Questions (FAQ)

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

Q2: Can I claim HRA if I live with my parents?
A: Yes, if you pay rent to your parents and can provide proof (rent receipts, bank transfers), you can claim HRA exemption.

Q3: What documents are needed to claim HRA?
A: Rent receipts (with landlord PAN if rent > ₹1 lakh/year), rent agreement, and proof of payment (if asked by IT department).

Q4: Is there any minimum rent requirement?
A: No minimum, but exemption is calculated as (rent paid - 10% of salary), so rent must exceed 10% of salary to get any benefit.

Q5: Can I claim HRA if I own a house?
A: Yes, if you're paying rent for another house (for work reasons) while owning a house elsewhere, you can claim HRA.