1. What is HRA Exemption?

The HRA (House Rent Allowance) exemption is a tax benefit in India that allows salaried individuals to claim exemption on the HRA component of their salary if they live in rented accommodation. The exemption is calculated as the minimum of three amounts.

2. How Does the Calculator Work?

The calculator uses the HRA exemption formula:

Where:

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

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

3. Importance of HRA Exemption Calculation

Details: Proper HRA exemption calculation can significantly reduce taxable income and lower tax liability for salaried individuals living in rented accommodation.

4. Using the Calculator

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

5. Frequently Asked Questions (FAQ)

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

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

Q3: What documents are needed to claim HRA exemption?
A: Rent receipts (with landlord PAN if annual rent exceeds ₹1 lakh) and rent agreement are typically required.

Q4: Is there any limit on rent paid for HRA exemption?
A: No fixed limit, but exemption is calculated based on the formula and actual HRA received.

Q5: Can I claim HRA exemption if I own a house?
A: Yes, if you live in a rented house in a different city for employment, even if you own a house elsewhere.