1. What is HRA Exemption?

HRA (House Rent Allowance) exemption is the portion of your HRA that is not taxable under the Indian Income Tax Act. It's calculated based on your salary, actual rent paid, and whether you live in a metro or non-metro city.

2. How Does the Calculator Work?

The calculator uses the HRA exemption formula:

Where:

• Rent Paid — Actual rent paid minus 10% of salary
• 50%/40% of Salary — 50% if metro city, 40% if non-metro
• HRA Received — Actual HRA received from employer

Explanation: The exemption is the least of these three values, ensuring you don't claim more exemption than you're entitled to.

3. Importance of HRA Exemption

Details: Correctly calculating HRA exemption can significantly reduce your taxable income and lower your tax liability. It's one of the most common and valuable tax-saving components for salaried individuals.

4. Using the Calculator

Tips: Enter all values in Indian Rupees (₹). Rent paid should be the actual amount paid, salary is your basic salary plus DA, and HRA received is the amount shown in your salary slip. Select whether you live in a metro city (Delhi, Mumbai, Chennai, Kolkata) or non-metro.

5. Frequently Asked Questions (FAQ)

Q1: What are considered metro cities for HRA?
A: Only Delhi, Mumbai, Chennai, and Kolkata are considered metro cities for HRA exemption purposes.

Q2: Can I claim HRA if I live in my own house?
A: No, HRA exemption is only available if you're paying rent. If you live in your own house, HRA is fully taxable.

Q3: Do I need rent receipts to claim HRA?
A: Yes, you should maintain rent receipts as proof, especially if your annual rent exceeds ₹1 lakh.

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

Q5: How is HRA treated if I don't live in rented accommodation?
A: The entire HRA amount becomes taxable if you don't live in rented accommodation.