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 FY 2023-24.

2. How HRA Exemption is Calculated?

The exemption is the least of three amounts:

Where:

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

3. Importance of HRA Exemption

Details: HRA exemption can significantly reduce taxable income for salaried individuals living in rented accommodation. Proper calculation ensures tax compliance while maximizing benefits.

4. Using the Calculator

Tips: Enter actual HRA received, basic salary, annual rent paid, and select city type. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Which cities are considered metro for HRA?
A: Only Delhi, Mumbai, Chennai, and Kolkata qualify for 50% calculation. All other cities use 40%.

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

Q3: What if my rent exceeds ₹1 lakh annually?
A: You may 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 accommodation at a time.

Q5: Is rent receipt mandatory for HRA claim?
A: Yes, you should maintain rent receipts as proof, though they may not be submitted unless requested.