1. What is HRA Exemption?

The HRA (House Rent Allowance) exemption allows salaried individuals to claim tax benefits on rent paid for accommodation. The exemption is calculated as the minimum of three components: rent paid minus 10% of salary, 50%/40% of salary (metro/non-metro), or actual HRA received.

2. How Does the Calculator Work?

The calculator uses the HRA exemption formula:

Where:

• Rent Paid — Actual rent paid for accommodation
• Salary — Basic salary + Dearness Allowance (DA)
• HRA Received — House Rent Allowance component of salary
• 50%/40% — Percentage based on metro (50%) or non-metro (40%) city

Explanation: The exemption is calculated as the least of the three components to ensure fair tax benefits.

3. Importance of HRA Exemption

Details: HRA exemption can significantly reduce taxable income for salaried individuals paying rent, leading to substantial tax savings under Section 10(13A) of Income Tax Act.

4. Using the Calculator

Tips: Enter actual rent paid, basic salary + DA, HRA received, and select city type (metro/non-metro). All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What are metro cities for HRA exemption?
A: Delhi, Mumbai, Chennai, and Kolkata are considered metro cities (50% of salary). All others are non-metro (40%).

Q2: Can I claim HRA exemption without receipts?
A: For rent > ₹1 lakh annually, you must provide landlord PAN and rent receipts to claim exemption.

Q3: What if I live in my own house?
A: HRA exemption is not available if you're not paying rent, even if you receive HRA from employer.

Q4: Can I claim HRA for rent paid to family?
A: Yes, but you must have proper rent agreement and payment proof (bank transfer preferred).

Q5: Is there any maximum limit for HRA exemption?
A: No fixed limit, but exemption cannot exceed actual HRA received or calculated components.