1. What is HRA Exemption?

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 per Income Tax rules for AY 2024-25.

2. How HRA Exemption is Calculated

The exemption is the least of the following three amounts:

Where:

• Actual HRA — The HRA amount received from your employer
• 50%/40% of Salary — 50% for metro cities (Delhi, Mumbai, Chennai, Kolkata), 40% for others
• Rent minus 10% of Salary — The excess of rent paid over 10% of salary

3. Importance of HRA Exemption

Details: Claiming HRA exemption can significantly reduce your taxable income, thereby lowering your tax liability. It's especially beneficial for individuals living in rented accommodations in metro cities.

4. Using the Calculator

Tips: Enter your actual HRA received, basic salary, rent paid, and select whether you live in a metro or non-metro city. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What documents are needed to claim HRA exemption?
A: You need rent receipts (with landlord's PAN if rent exceeds ₹1 lakh annually) and proof of rent payment.

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

Q3: What if I don't receive HRA but pay rent?
A: You may claim deduction under Section 80GG, subject to certain conditions and limits.

Q4: How is 'salary' defined for HRA calculation?
A: For HRA purposes, salary means basic salary plus dearness allowance (if part of retirement benefits).

Q5: Can I claim HRA for two different houses?
A: No, exemption is allowed only for one residential accommodation at a time.