What is HRA Exemption?

House Rent Allowance (HRA) is a salary component you receive if you live in rented accommodation. Under Section 10(13A) of Income Tax Act, part of HRA is exempt from tax based on three rules — lowest of the three applies. Major savings for salaried Indians in metros (Delhi, Mumbai, Chennai, Kolkata: 50% rule) and non-metros (40% rule). Cannot claim if living in own house.

How to use

1. Enter basic salary — Monthly basic component
2. Enter HRA received — Monthly HRA from salary
3. Enter rent paid — Monthly rent actually paid
4. Choose city type — Metro (50%) or Non-Metro (40%)

Formula

HRA Exempt = MIN of:

1. Actual HRA received
2. Rent paid – 10% of basic salary
3. 50% of basic (metro) OR 40% of basic (non-metro)

Whichever is LOWEST = exempt amount.

Tips

• Save rent receipts (especially if rent > ₹1L annually)
• Landlord PAN required if annual rent > ₹1,00,000
• Even if landlord is parent (rent paid to parent), HRA can be claimed if rent is genuine
• Can claim BOTH HRA and home loan interest if you have a home loan on different property
• HRA optimization: balance rent and basic salary structure for maximum exemption

FAQs

Is Bangalore a metro for HRA?

No — Income Tax only considers Delhi, Mumbai, Chennai, Kolkata as metro for HRA. Bangalore, Hyderabad, Pune, etc. = non-metro (40%).

Can I claim HRA if I'm self-employed?

No — HRA is for salaried employees only. Self-employed can claim Section 80GG deduction (different rules, capped at ₹5,000/month).

What if I get rent receipts from family?

Allowed if genuine. Rent must be actually paid to family member who has the income reported in their ITR. Avoid round numbers; show bank transfer.

HRA exemption in new tax regime?

Not available in new regime (default from FY 2023-24). To claim HRA, opt for old regime when filing.

Related

Income Tax Calculator · Salary Calculator · GST Calculator