1. What is HRA Exemption?

The HRA (House Rent Allowance) exemption allows salaried individuals to claim tax benefits on the rent they pay. The exemption is calculated as the least of three amounts: actual HRA received, 50%/40% of salary (depending on city), or rent paid minus 10% of salary.

2. How Does the Calculator Work?

The calculator uses the HRA exemption formula:

Where:

• Actual HRA - The amount received as HRA from your employer
• 50%/40% of Salary - 50% for metro cities (Delhi, Mumbai, Chennai, Kolkata), 40% for others
• Rent minus 10% of Salary - The excess of rent paid over 10% of basic salary

Explanation: The tax exemption is calculated as the minimum of these three values to ensure fair benefit.

3. Importance of HRA Exemption

Details: HRA exemption can significantly reduce your taxable income, especially for those living in rented accommodations in metro cities with high rental costs.

4. Using the Calculator

Tips: Enter your actual HRA received, basic salary, rent paid, and select whether you live in a metro or non-metro city. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Which cities are considered metro for HRA calculation?
A: Only Delhi, Mumbai, Chennai, and Kolkata qualify for the 50% calculation. All other cities use 40%.

Q2: Can I claim HRA exemption if I live in my own house?
A: No, HRA exemption is only available for those living in rented accommodations.

Q3: What if my rent is less than 10% of salary?
A: The third component (rent - 10% of salary) becomes negative, so it won't be considered for exemption.

Q4: Can I claim HRA exemption without rent receipts?
A: For amounts above ₹1,00,000 per year, you must provide rent receipts and landlord's PAN (if rent exceeds ₹1,00,000 per month).

Q5: Does this apply to self-employed individuals?
A: No, HRA exemption is only for salaried individuals receiving HRA as part of their salary.