📑 Table of Contents
- What is House Rent Allowance (HRA)?
- Eligibility to Claim HRA
- Tax Exemption on HRA under Section 10(13A)
- How to Calculate HRA Exemption?
- HRA Calculation Examples
- Documents Required for Claiming HRA
- Old Regime vs New Regime: HRA Exemption
- Tips to Maximize HRA Exemption
- Common Errors While Claiming HRA
- FAQs
🏠 What is House Rent Allowance (HRA)?
House Rent Allowance (HRA) is a component of salary provided by employers to employees to meet rental expenses. It is partially or fully exempt under Section 10(13A) of the Income Tax Act, subject to conditions.
HRA helps salaried individuals save tax if they live in rented accommodation.
✅ Eligibility to Claim HRA
You can claim HRA exemption only if:
- You’re a salaried employee
- You receive HRA as part of your salary
- You pay rent for your accommodation
- You do not own the house you live in
📜 Tax Exemption on HRA under Section 10(13A)
The HRA exemption is calculated as the least of the following three:
| Condition | Description |
|---|---|
| A | Actual HRA received from employer |
| B | 50% of salary (metro cities: Mumbai, Delhi, Chennai, Kolkata); 40% for others |
| C | Rent paid minus 10% of salary |
Note: “Salary” here includes Basic + DA (if applicable for retirement benefits).
📊 How to Calculate HRA Exemption?
✍️ Step-by-Step Calculation:
- Calculate actual HRA received
- Compute 50% or 40% of salary (based on city)
- Compute rent paid – 10% of salary
- Take the least of the three values above = HRA exemption
- Remaining amount of HRA = Taxable HRA
📘 HRA Calculation Example
Example Scenario:
- Basic Salary: ₹40,000/month
- HRA Received: ₹20,000/month
- Rent Paid: ₹18,000/month
- City: Mumbai (metro)
Annual Calculation:
| Calculation | Amount |
|---|---|
| A. Actual HRA Received | ₹2,40,000 |
| B. 50% of Salary (₹40,000 × 12 × 50%) | ₹2,40,000 |
| C. Rent Paid – 10% of Salary = ₹2,16,000 – ₹48,000 | ₹1,68,000 |
👉 HRA Exempt = ₹1,68,000
👉 Taxable HRA = ₹2,40,000 – ₹1,68,000 = ₹72,000
📂 Documents Required for Claiming HRA
To claim HRA exemption, submit the following to your employer:
- Rent receipts with revenue stamp
- Rent agreement (optional but preferred)
- PAN of landlord if annual rent > ₹1,00,000
- Aadhaar and PAN copy of employee (for employer records)
- Bank statement showing rent transfers (sometimes required)
⚖️ Old Regime vs New Regime: HRA Exemption
| Feature | Old Tax Regime | New Tax Regime |
|---|---|---|
| HRA Exemption | ✅ Allowed | ❌ Not Allowed |
| Benefit from rent paid | ✅ Yes | ❌ No |
| Best for those in rented accommodation | ✅ Yes | ❌ No HRA benefits |
If you’re living in rented accommodation, opt for the old regime to avail HRA benefits.
💡 Tips to Maximize HRA Exemption
- Live in metro cities (you get 50% of salary benefit instead of 40%)
- Keep proper rent receipts and PAN of landlord
- Pay rent through bank transfers to build a trail
- Don’t forget to update rent amount yearly
- If paying rent to parents, make sure it’s documented
❌ Common Errors While Claiming HRA
- Not reporting rent paid in return
- Using wrong salary breakup (not including DA)
- Not taking metro/non-metro city into account
- Missing PAN of landlord if rent exceeds ₹1,00,000/year
- Claiming HRA and home loan benefits for the same house
🔗 Internal Links
- Understand the Basic Salary Structure
- Know: How to File ITR 2025 – Step by Step
- Learn about Salary Components and Taxability
- Filing for Income Tax Refund? Here’s What to Do
🔗 External Links
❓ FAQs
- • Can I claim HRA without rent receipts?
No, rent receipts are mandatory proof, especially if rent exceeds ₹3,000/month. - • Can I pay rent to parents and claim HRA?
Yes, provided the rent is paid through bank and the house is not owned by you. - • Is PAN of landlord required always?
Only if rent paid exceeds ₹1 lakh in a financial year. - • How much of HRA is tax-exempt?
The least of the three conditions under Section 10(13A). - • Can I claim both HRA and home loan benefits?
Yes, only if the house is in another city or under construction and you’re living in a rented house. - • Is HRA benefit available in new regime?
No, HRA exemption is not available under the new tax regime. - • Is HRA calculated on gross salary?
No, only on Basic + applicable DA. - • Can self-employed individuals claim HRA?
No, HRA is only for salaried individuals. However, they can claim rent under Section 80GG. - • What if I switch jobs mid-year?
HRA must be calculated separately for both jobs with respective salary and rent figures. - • Do I need to submit proof while filing ITR?
No, but keep documents handy in case the return is picked for scrutiny.
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