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 minimum of three amounts specified under Section 10(13A) of the Income Tax Act.

2. How HRA Exemption is Calculated

The exemption is calculated as the minimum of:

Where:

• Actual HRA — The actual HRA received from your employer
• 50% of salary — For metro cities (Delhi, Mumbai, Chennai, Kolkata)
• 40% of salary — For other cities
• Rent paid minus 10% of salary — The excess of rent paid over 10% of salary

3. Importance of HRA Exemption

Details: HRA exemption can significantly reduce your taxable income, leading to lower tax liability. Proper calculation ensures you claim the correct exemption and avoid issues during tax assessment.

4. Using the Calculator

Tips: Enter your actual HRA received, basic salary, rent paid, and select whether you live in a metro city or not. All values must be positive numbers.

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. 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: What if my rent exceeds ₹1 lakh per annum?
A: If annual rent exceeds ₹1 lakh, you need to provide landlord's PAN to your employer.

Q4: Can I claim HRA exemption without salary HRA component?
A: No, you must have HRA as part of your salary structure to claim this exemption.

Q5: Is rent receipt mandatory for HRA exemption?
A: While not required for filing, you should maintain rent receipts as proof in case of tax scrutiny.