Understanding HRA Exemption Rules
House Rent Allowance (HRA) is a common component of the salary package. If you stay in a rented accommodation, you can claim a tax exemption on HRA under Section 10(13A) of the Income Tax Act.
The Rules of Calculation
The exact chunk of your HRA that is entirely exempt from income tax is determined by finding the lowest figure among these three conditions:
- The actual HRA amount given by your employer.
- Actual Rent Paid minus 10% of your Basic Salary.
- 50% of your Basic Salary (if you reside in Delhi, Mumbai, Chennai, or Kolkata) OR 40% of your Basic Salary (if you reside in any other city).
Common FAQs
Can I claim HRA if I live with my parents?
Yes. You can pay rent to your parents (and get a rental agreement/receipts generated). However, your parents must legally show this rent as 'Income from House Property' on their own tax returns.
Can I claim HRA if I pay a Home Loan EMI?
Yes, you can simultaneously claim Home Loan interest deductions under Sec 24(B) AND HRA exemption, provided the house you bought is not the residence where you are currently living (e.g., your house is in Bangalore but you work and pay rent in Pune).
Do I need the landlord's PAN?
If your annual rent payment exceeds ₹1,00,000, it is mandatory to submit your landlord's PAN to your employer to claim HRA benefits.