1. What is HRA Exemption?

The HRA (House Rent Allowance) exemption is a tax benefit available to salaried individuals in India who receive HRA as part of their salary and pay rent for their accommodation. The exemption is calculated as the least of three specified amounts under Section 10(13A) of the Income Tax Act.

2. How Does the Calculator Work?

The calculator uses the HRA exemption formula:

Where:

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

Explanation: The exemption is calculated as the minimum 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 for salaried individuals paying rent. It's especially valuable for employees living in high-rent cities.

4. Using the Calculator

Tips: Enter actual rent paid (annual), basic salary + DA (annual), HRA received (annual), and select whether you live in a metro city or not. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Which cities are considered metro for HRA calculation?
A: Only Delhi, Mumbai, Chennai, and Kolkata qualify for the 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 if you're paying rent for accommodation.

Q3: Is rent receipt mandatory for HRA exemption?
A: For rent exceeding ₹1,00,000 annually, landlord PAN is required. Rent receipts are generally recommended as proof.

Q4: What if I pay rent to my parents?
A: You can claim HRA exemption when paying rent to parents, but they must declare this rental income in their tax return.

Q5: Does the calculator work for AY 2025-26?
A: Yes, this calculator is designed for Assessment Year 2025-26 (Financial Year 2024-25).