House Rent Allowance (HRA) is one of the most common salary components, and one of the most misunderstood when it comes to tax exemption. Under Section 10(13A) of the Income Tax Act, salaried employees who live in rented accommodation can claim exemption on a part of their HRA — but the exempt amount is not simply what your employer pays you.
The exemption is calculated as the least of three amounts: the actual HRA received from your employer, the actual rent paid minus 10% of your salary (Basic + Dearness Allowance), or 50% of your salary if you live in a metro city (Delhi, Mumbai, Kolkata, Chennai) or 40% if you live elsewhere. Whichever of these three figures is smallest becomes your exempt HRA — the rest is added to your taxable salary.
This calculator applies that formula directly to your numbers. Note that HRA exemption is available only under the Old Tax Regime — if you have opted for the New Tax Regime, this exemption does not apply, though other slab benefits may still make the New Regime worthwhile depending on your overall income and deductions.
Yes, provided the rental arrangement is genuine — you should have a rent agreement, make payments (ideally via bank transfer), and your parents should declare this rental income in their own tax return.
No. HRA exemption under Section 10(13A) is available only if you opt for the Old Tax Regime while filing your return.
Rent receipts and a rent agreement are generally sufficient. If annual rent exceeds ₹1,00,000, you must also provide your landlord's PAN to your employer.
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