1. What is HRA Exemption?

HRA (House Rent Allowance) exemption is a tax benefit available to salaried individuals in India who live in rented accommodation. The exemption is calculated as the minimum of three components: rent paid minus 10% of salary, 50%/40% of salary (metro/non-metro), or actual HRA received.

2. How Does the Calculator Work?

The calculator uses the HRA exemption formula:

Where:

• \( \text{Rent Paid} \) — Actual rent paid (INR)
• \( \text{Salary} \) — Basic salary + DA (INR)
• \( \text{HRA Received} \) — Actual HRA component of salary (INR)
• \( 50\% \text{ or } 40\% \) — Metro cities (50%) or non-metro (40%)

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

3. Importance of HRA Calculation

Details: Proper HRA exemption calculation helps maximize tax savings while remaining compliant with income tax laws. It's a significant component of salary tax planning.

4. Using the Calculator

Tips: Enter all amounts in INR. Rent paid should be actual rent minus any non-rent components. Salary means basic + DA. Select metro for Delhi, Mumbai, Chennai, or Kolkata.

5. Frequently Asked Questions (FAQ)

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

Q2: What if my rent exceeds ₹1 lakh annually?
A: If annual rent exceeds ₹1 lakh, you must provide landlord's PAN to claim exemption, unless the landlord is exempt from PAN.

Q3: Can I claim HRA if I live with parents?
A: Yes, if you pay rent to them and can provide proof of payment (bank transfer preferred).

Q4: What if I don't receive HRA in my salary?
A: You may still claim deduction under Section 80GG, subject to certain conditions.

Q5: How is HRA treated for tax filing?
A: The exempt amount is deducted from your taxable income under Section 10(13A) of Income Tax Act.