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 per Income Tax rules to reduce taxable income.

2. How is HRA Exemption Calculated?

The exemption is the least of the following three amounts:

Where:

• Rent Paid - Actual rent paid minus 10% of salary
• 50%/40% of Salary - 50% if living in metro city (Delhi, Mumbai, Chennai, Kolkata), 40% otherwise
• HRA Received - Actual HRA received from employer

3. Importance of HRA Exemption

Details: Claiming HRA exemption can significantly reduce your taxable income and thus your tax liability. It's one of the most common and valuable tax-saving provisions for salaried individuals in India.

4. Using the Calculator

Tips: Enter your actual rent paid (total for the year), your basic salary + DA, the HRA you receive from your employer, and select whether you live in a metro city or not. The calculator will determine your eligible exemption amount.

5. Frequently Asked Questions (FAQ)

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

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

Q3: What documents are needed to claim HRA exemption?
A: You may need rent receipts (especially if rent exceeds ₹1 lakh per year) and potentially a rent agreement. For rents above ₹50,000/month, landlord's PAN is required.

Q4: Can I claim HRA exemption if I don't receive HRA from my employer?
A: No, the exemption is only available against actual HRA received as part of your salary.

Q5: How is HRA treated if I'm self-employed?
A: Self-employed individuals cannot claim HRA exemption. They may deduct rent payments under Section 80GG with certain conditions.