1. What is HRA Exemption?

The HRA (House Rent Allowance) exemption is a tax benefit available to salaried individuals who live in rented accommodation. The exemption amount is calculated as the minimum of three components: actual HRA received, rent paid minus 10% of salary, or 50%/40% of salary depending on city type.

2. How Does the Calculator Work?

The calculator uses the HRA exemption formula:

Where:

• \( \text{actual HRA} \) — HRA received from employer (INR)
• \( \text{rent} \) — Total rent paid (INR)
• \( \text{salary} \) — Basic salary (INR)
• \( 50\% \) — For metro cities (Delhi, Mumbai, Chennai, Kolkata)
• \( 40\% \) — For non-metro cities

Explanation: The exemption is calculated as the least of the three components to ensure fair tax benefits.

3. Importance of HRA Exemption

Details: Proper calculation of HRA exemption can significantly reduce taxable income and lower tax liability for salaried individuals living in rented accommodation.

4. Using the Calculator

Tips: Enter actual HRA received, total rent paid, basic salary, and select city type. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What are metro cities for HRA exemption?
A: Delhi, Mumbai, Chennai, and Kolkata are considered metro cities (50% of salary). All others are non-metro (40% of salary).

Q2: Can I claim HRA exemption without rent receipts?
A: For rent above ₹1 lakh annually, you must provide landlord's PAN and rent receipts as per income tax rules.

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

Q4: 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 benefits instead.

Q5: Is there any maximum limit for HRA exemption?
A: No fixed limit - it depends on your salary structure, rent paid, and city type as per the calculation.