1. What is HRA Exemption?

The HRA (House Rent Allowance) exemption is a tax benefit available to salaried individuals who receive HRA as part of their salary and pay rent for their accommodation. The exemption is calculated as the minimum of three components.

2. How Does the Calculator Work?

The calculator uses the HRA exemption formula:

Where:

• \( \text{Rent Paid} \) — Actual rent paid minus 10% of salary
• \( \text{Salary} \) — Basic salary plus dearness allowance
• \( 50\% \text{ or } 40\% \) — 50% for metro cities, 40% for non-metro cities
• \( \text{HRA Received} \) — Actual HRA received from employer

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

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 accommodations.

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.

5. Frequently Asked Questions (FAQ)

Q1: Which cities are considered metro for HRA?
A: Delhi, Mumbai, Chennai, and Kolkata are considered metro cities. All others are non-metro.

Q2: Can I claim HRA if I live in my own house?
A: No, HRA exemption is only available for rented accommodations.

Q3: What if my rent exceeds ₹1 lakh annually?
A: You need to provide landlord's PAN if rent exceeds ₹1 lakh per year.

Q4: Can I claim HRA exemption for two houses?
A: No, exemption is allowed only for one rented house at a time.

Q5: Is rent receipt mandatory for claiming HRA?
A: Yes, you should maintain rent receipts as proof for tax purposes.