Question 1

How is HRA exemption calculated?

Accepted Answer

Under Section 10(13A) and Rule 2A, the exempt amount is the least of three figures: the actual HRA received; rent paid minus 10% of salary; and 50% of salary if you live in Delhi, Mumbai, Kolkata or Chennai, or 40% anywhere else. Salary here means basic pay plus dearness allowance that counts for retirement benefits, plus any commission paid as a fixed percentage of turnover. Whatever is left of the HRA after the exemption is taxable.

Question 2

Is HRA exemption available under the new tax regime?

Accepted Answer

No. HRA exemption is one of the deductions given up under Section 115BAC. It is available only if you opt for the old regime. For many salaried people paying substantial rent in a metro, the HRA exemption alone can make the old regime the better choice, which is why it is worth computing before you pick.

Question 3

Which cities count as metro for HRA?

Accepted Answer

Only four: Delhi, Mumbai, Kolkata and Chennai. Bengaluru, Hyderabad, Pune, Ahmedabad and every other city are treated as non-metro for this rule and get the 40% limit, regardless of their size or rent levels. This is a frequent source of over-claimed exemption.

Question 4

Do I need my landlord's PAN?

Accepted Answer

If the rent paid exceeds ₹1,00,000 a year, you must report the landlord's PAN to your employer to claim HRA exemption through payroll. If the landlord does not have a PAN, a declaration to that effect is required. For rent above ₹50,000 a month, you also have to deduct TDS at 2% under Section 194-IB.

Question 5

Can I claim HRA if I pay rent to my parents?

Accepted Answer

Yes, if the arrangement is genuine: you actually pay the rent, ideally by bank transfer, the property is owned by the parent, and the parent reports the rent as income in their return. A rent agreement and receipts are expected. Paying rent to a spouse is generally not accepted.

Question 6

What if I don't receive HRA from my employer at all?

Accepted Answer

You cannot use Section 10(13A), but you may be able to claim a deduction under Section 80GG instead, capped at ₹5,000 a month, provided you, your spouse and minor children own no residential property where you live. This calculator covers 10(13A) only.

Question 7

Should I enter monthly or annual figures?

Accepted Answer

Either. Switch the toggle and enter all figures the same way. The exemption is technically computed for the period the HRA was received and the rent was paid, so if your salary, rent or city changed mid-year, compute each period separately and add them.

Question 8

Does DA count as salary for HRA?

Accepted Answer

Only dearness allowance that forms part of retirement benefits (usually stated in your CTC or appointment letter as DA counting for PF or gratuity). DA that does not count for retirement benefits is excluded from the salary base. If you are unsure, check whether your PF contribution is computed on basic plus DA.

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