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 minimum of three specified 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
• \( \text{Salary} \) — Basic salary plus dearness allowance
• \( \text{City Type} \) — 50% of salary for metro cities, 40% for others
• \( \text{HRA Received} \) — Actual HRA received from employer

Explanation: The exemption is the least of these three values to prevent excessive tax benefits.

3. Importance of HRA Calculation

Details: Proper HRA exemption calculation helps maximize tax savings while ensuring compliance with income tax laws. It reduces taxable income significantly for salaried individuals paying rent.

4. Using the Calculator

Tips: Enter actual rent paid, your basic salary plus DA, HRA received from employer, and select whether you live in a metro city (Delhi, Mumbai, Chennai, Kolkata) or non-metro city.

5. Frequently Asked Questions (FAQ)

Q1: Which cities are considered metro for HRA?
A: Only Delhi, Mumbai, Chennai, and Kolkata qualify for 50% of salary 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 pay rent for accommodation.

Q3: Is rent receipt mandatory for HRA claim?
A: For rent exceeding ₹1 lakh annually, you need to provide landlord's PAN and rent receipts as proof.

Q4: What if my actual rent is less than 10% of salary?
A: The first component becomes negative, so your exemption will be zero for that component.

Q5: Can I claim HRA if I'm paying home loan EMI?
A: Yes, if you're paying rent elsewhere while also paying EMI. Both benefits are separate.