How HRA exemption is calculated
The exempt amount is the lowest of three figures: the HRA you actually receive, 50% of basic salary in a metro (40% elsewhere), and rent paid minus 10% of basic. The remainder of your HRA is taxable. Metro means Delhi, Mumbai, Kolkata and Chennai for this rule.
Example
Basic ₹6 lakh, HRA ₹2.4 lakh, rent ₹3 lakh in Mumbai: the three figures are ₹2.4 lakh, ₹3 lakh and ₹2.4 lakh, so ₹2.4 lakh is exempt and nothing is taxable.
Documents and rules
Rent receipts are needed above ₹3,000 a month and the landlord's PAN above ₹1 lakh a year. HRA exemption is available only under the old tax regime; paying rent to parents is allowed if they declare it as income.
Frequently asked questions
Can I claim HRA and home loan interest together?
Yes, if you live in a rented house in one city and own a house elsewhere, or your own house is let out.
What if my salary has no HRA component?
You can instead claim up to ₹60,000 a year under Section 80GG, subject to conditions.
Is HRA available in the new regime?
No. It is one of the main reasons high-rent taxpayers stay in the old regime.