What is HRA?
House Rent Allowance (HRA) is a common component of a salaried individual's pay structure. It is provided by the employer to meet the accommodation expenses of the employee.
Tax Exemption Rules under Section 10(13A)
The exemption for HRA is calculated as the minimum of the following three conditions:
- Actual HRA received from the employer.
- 50% of Basic Salary + DA (for those living in metro cities: Delhi, Mumbai, Chennai, Kolkata) or 40% of Basic Salary + DA (for non-metros).
- Actual rent paid minus 10% of Basic Salary + DA.
Note: HRA exemption can only be claimed if you are living in a rented house. If you live in your own house or do not pay any rent, the entire HRA received becomes fully taxable. This exemption is only available under the Old Tax Regime.
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