1. What is HRA Exemption?

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.

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
• \( 50\% \text{ or } 40\% \) — 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 Calculation

Details: Proper calculation of HRA exemption helps in accurate tax planning and ensures compliance with income tax regulations while maximizing tax benefits.

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 or non-metro city.

5. Frequently Asked Questions (FAQ)

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

Q2: Can I claim HRA exemption 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 exemption?
A: For rent exceeding ₹1 lakh annually, you need to provide landlord's PAN and rent receipts as proof.

Q4: Can I claim HRA exemption if I don't receive HRA in my salary?
A: No, HRA exemption is only available if you receive HRA as part of your salary.

Q5: How is HRA exemption treated in the new tax regime?
A: Under the new tax regime (from FY 2020-21), HRA exemption is not available.