1. What is HRA Exemption?

HRA (House Rent Allowance) exemption is a tax benefit available to salaried individuals 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:

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

Explanation: The exemption is calculated as the minimum of these three values to determine the tax-free portion of your HRA.

3. Importance of HRA Exemption

Details: Proper calculation of HRA exemption can significantly reduce your taxable income and lower your tax liability. It's especially valuable for employees living in rented accommodations in high-rent cities.

4. Using the Calculator

Tips: Enter all amounts in INR. Rent paid should be the actual amount paid, salary is basic + DA, and HRA received is the component from your salary slip. Select whether you live in a metro city or not.

5. Frequently Asked Questions (FAQ)

Q1: Which cities are considered metro for HRA?
A: Delhi, Mumbai, Kolkata, and Chennai are classified as metro cities. Bengaluru, Hyderabad etc. are considered non-metro for HRA 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 for accommodation.

Q3: What if my rent exceeds ₹1 lakh annually?
A: If annual rent exceeds ₹1 lakh, you need to provide landlord's PAN to claim exemption.

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

Q5: How often should I calculate HRA exemption?
A: You should calculate it whenever your rent, salary, or HRA component changes, typically at the start of each financial year.