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:

• \( \text{Actual HRA} \) — HRA received from employer
• \( \text{Salary} \) — Basic salary + Dearness Allowance (if applicable)
• \( \text{Rent} \) — Total rent paid minus 10% of salary
• \( 50\% \text{ or } 40\% \) — Metro cities get 50%, others 40%

Explanation: The exemption is the minimum of these three values to prevent excessive tax benefits.

3. Importance of HRA Exemption

Details: Correct calculation of HRA exemption can significantly reduce taxable income, leading to lower tax liability. It's especially valuable for employees living in high-rent areas.

4. Using the Calculator

Tips: Enter actual HRA received, basic salary, rent paid, and select whether you live in a metro city (Delhi, Mumbai, Chennai, Kolkata) or non-metro city.

5. Frequently Asked Questions (FAQ)

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

Q2: Can I claim HRA if I live in my own house?
A: No, HRA exemption is only available for rented accommodation. However, you may claim home loan interest benefits separately.

Q3: What if my rent exceeds ₹1 lakh annually?
A: For rent above ₹1 lakh/year, you must provide landlord's PAN or file Form 12BB with employer.

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

Q5: How often should I calculate HRA exemption?
A: Whenever your salary, HRA component, or rent changes significantly. Typically calculated annually for tax filing.