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 per Income Tax rules for FY 2024-25.

2. How is HRA Exemption Calculated?

The HRA exemption is the least of three amounts:

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 minimum of these three values to ensure fair tax benefits.

3. Importance of HRA Exemption

Details: Claiming HRA exemption can significantly reduce taxable income, leading to lower tax liability. Proper documentation (rent receipts, rental agreement) is essential.

4. Using the Calculator

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

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 accommodation.

Q3: What documents are needed to claim HRA?
A: Rent receipts, rental agreement (if rent > ₹1 lakh/year), and landlord's PAN (if rent > ₹1 lakh/month).

Q4: Can I claim HRA if I pay rent to my parents?
A: Yes, but the payment should be genuine and supported by proper documentation.

Q5: Is there any maximum limit for HRA exemption?
A: No fixed limit, but exemption cannot exceed the least of the three calculated components.