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Input Type
Staying in Metro ?
Basic salary (As per salary slip)
HRA Received (As per salary slip)
Rent Paid

Save on your taxes, try the HRA exemption calculator

HRA is one of the most common tax deductions that salaried employees can claim. The HRA exemption is designed to help employees who are paying rent to live in a city where the cost of living is high. It is also meant to encourage employees to relocate to cities where there is a shortage of skilled workers.

What is HRA in salary?

HRA full form is House Rent Allowance. It is a component of an employee's salary paid to them by their employer towards the rent of their house. HRA exemption is a tax exemption that salaried employees in India can claim on the House Rent Allowance (HRA) that they receive from their employers.


The amount of HRA exemption that an employee can claim depends on the following factors:

  • The city in which the employee lives.
  • The employee's basic salary and dearness allowance (DA).
  • The actual rent paid by the employee.


Benefits of HRA Exemption

The HRA exemption offers a number of benefits to employees, including:

  • Reduced tax liability: The HRA exemption can help employees to reduce their tax liability significantly.
  • Increased disposable income: The HRA exemption can help employees to increase their disposable income, which can be used to meet other financial obligations or to save for the future.
  • Flexibility: Employees can choose to live in any city they want, without having to worry about the high cost of rent.
  • Mobility: The HRA exemption can encourage employees to relocate to cities where there is a shortage of skilled workers.

HRA comes under which section?

Employees can claim a tax exemption on it under Section 10(13A) of the Income Tax Act, 1961. To claim HRA exemption, employees must meet the following conditions:

  • They must be occupying the house on rent.
  • The house must be used for the employee's sole or principal residence.
  • The employee must not own any other residential property at the place where they are currently residing.

How much HRA can be claimed?

The entire HRA amount paid to an employee cannot be claimed for deduction. Also note, that the rent you actually pay is likely to differ from the HRA you receive. Additionally, HRA calculation also takes into consideration if you live in a metro city (Delhi, Kolkata, Mumbai, or Chennai) or in a non-metro city; 50% of your basic salary if you live in a metro city else 40% of your basic salary.


Hence, the HRA claim is the lowest of:

  • Annual HRA received = monthly HRA * 12
  • Actual rent paid - 10% of basic pay =  monthly rent paid * 12 - 10% of (monthly basic pay*12)
  • 40% or 50% of your annual basic pay

Employees are required to produce proofs like lease agreements or receipts to claim HRA. To avoid the fuss of last-minute proof, try our rent receipt generator free tool.

How to calculate HRA in salary?

As aforementioned, the HRA calculation depends on the basic salary of your CTC and your city of residence. We have simplified it for you with our HRA exemption calculator. 

10%, 40%, or 50% of the basic salary are used to calculate HRA.

No. HRA is designed for salaried individuals who take a rented space in a metro or non-metro city. Hence, living in your own house doesn’t qualify you to claim HRA.

To claim HRA, individuals must submit proof of residence at the rented property. They could submit a copy of the lease agreement or rent receipts.

Self-employed individuals like freelancers can claim HRA under Section 80GG which allows a maximum deduction of Rs. 60,000 p.a.

House Rent Allowance (HRA) is a component of the salary paid to salaried employees to help them meet the cost of renting a house. Actual rent paid is the amount of rent that the employee actually pays to their landlord.

As aforementioned, 50% of the basic salary is considered while calculating HRA for employees residing in metro cities of India; and 40% for employees working in non-metro cities.

Individuals can only claim part of the rental amount they pay. In most cases, HRA cannot exceed more than 50% of the basic salary.

Yes, in cases where individuals own a house in one city but pay rent in another, they can claim both HRA and home loan interest deduction from different sections of the Income Tax Act.

Fraudulent rent receipts may invite a penalty of 200% of the applicable tax.

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