Maximize HRA: Save 50% More Tax Now!
HRA Calculation Breakdown
| Month | HRA Received | HRA Exemption | Taxable HRA | Cumulative Exemption |
|---|
HRA Exemption Calculation Formula
HRA exemption is calculated as the least of the following:
- Actual HRA received
- 50% of basic salary (for metro cities) or 40% of basic salary (for non-metro cities)
- Actual rent paid minus 10% of basic salary
Taxable HRA = Total HRA received - HRA exemption
HRA Calculator - Frequently Asked Questions (FAQs)
1. What is HRA and how does it work?
HRA (House Rent Allowance)Â is a component of salary provided by employers to employees for meeting rental expenses. It offers tax benefits under Section 10(13A) of the Income Tax Act when you live in a rented accommodation.
2. Who is eligible for HRA exemption?
Any salaried individual who:
Receives HRA as part of their salary
Lives in a rented accommodation
Pays rent to a landlord (can be family members in some cases)
3. Can I claim HRA if I live in my own house?
No, HRA exemption is only available for rented accommodations. If you live in your own house, the entire HRA received becomes taxable.
4. How is HRA exemption calculated?
HRA exemption is the lowest of these three amounts:
Actual HRA received from employer
50% of basic salary (metro cities) or 40% (non-metro cities)
Actual rent paid minus 10% of basic salary
5. What is considered "metro city" for HRA calculation?
Metro cities include: Delhi, Mumbai, Kolkata, Chennai. All other cities are considered non-metro for HRA purposes.
6. How do I calculate HRA for monthly salary?
Use our HRA calculator by entering:
Your monthly basic salary
Monthly HRA received
Monthly rent paid
City type (metro/non-metro)
8. What documents are required for HRA claim?
Rent receipts (should include landlord PAN if rent exceeds ₹1 lakh annually)
Rent agreement (if available)
Proof of rent payment (bank statements/cancelled cheques)
9. Do I need landlord's PAN for HRA?
Yes, if your annual rent exceeds ₹1,00,000, you must provide landlord’s PAN details to your employer and in your tax return.
10. Can I claim HRA without rent receipts?
While you might claim it in ITR, employers typically require rent receipts for processing HRA exemption in salary.
11. Can I claim HRA if I live with my parents?
Yes, if you pay rent to your parents and have proper rent receipts and payment proofs. The rent income will be taxable for your parents.
12. What if I'm paying rent to my spouse?
Rent paid to spouse is not eligible for HRA exemption as it’s considered a transaction between family members without genuine rental intent.
13. How does HRA work when I live in multiple cities?
HRA exemption is based on the city where you actually reside and pay rent, not where your office is located.
14. Can I claim HRA and home loan benefits together?
Yes, you can claim both if you live in a rented house in one city while paying EMI for a house in another city. However, you cannot claim both for the same property.
15. How can I maximize my HRA exemption?
Ensure accurate declaration of rent paid
Choose the correct city classification
Maintain proper documentation
Plan rent payments to optimize tax benefits
16. Is HRA better than other tax saving options?
HRA is one of the easiest tax-saving options as it doesn’t require any investment and provides immediate tax benefit through reduced TDS.
17. Can I claim HRA if I work from home?
Yes, if you’re paying rent for your residence, you can claim HRA regardless of your work location.
18. How is HRA calculated when DA is part of salary?
For HRA calculation, “basic salary” includes dearness allowance (DA) if it forms part of retirement benefits.
19. What if my rent is higher than HRA received?
You can only claim exemption up to the actual HRA received, even if your rent is higher.
20. How does HRA affect my take-home salary?
HRA exemption reduces your taxable income, which lowers your TDS deduction and increases your monthly take-home salary.