What is HRA?
HRA stands for House Rent Allowance. It is an allowance given by an employer to an employee to cover the cost of their living in a rented house. As a salaried individual, you have the option to claim House Rent Allowance (HRA) to cover all the expenses related to rented housing. If you live in a rented property, you can take advantage of this exemption and reduce your potential tax liability. HRA can either be fully or partially exempt from taxation. To make you understand this situation better, our HRA exemption calculator will assist you in determining which portion of the HRA you receive from your employer is tax-exempt and how much is taxable.
If you receive HRA but do not live in a rented house, the entire allowance will be fully taxable. Additionally, claiming HRA is only possible under the old tax regime.
How To Figure Out The Tax - Exempt Amount of HRA?
The full amount of HRA received is not automatically fully exempt from tax. The exemption will be the smallest of the three amounts:
- HRA received from your employer
- Actual rent paid minus 10% of salary
- 50% of basic salary for those staying in metro cities and 40% of basic salary for those staying in non-metro cities.
The portion of HRA that is not exempt will be added to your taxable income. Our calculator can simplify the process of determining your HRA exemption. Let's understand this with an example:
Raghu, who lives in Mumbai, receives an HRA of Rs. 1 lakh from his employer. His basic monthly salary is Rs. 50,000, and he pays a monthly rent of Rs. 15,000. So, the following table shows the amount of HRA exemption that he is eligible to claim:
| S. No. |
Head |
Calculation |
Amount (Rs.) |
| 1. |
Actual HRA received from the employer |
1,00,000 |
| 2. |
Actual rent paid (-) 10% of salary |
(15000*12) - 10% (50000*12) |
1,20,000 |
| 3. |
50% of basic salary |
50% (50000*12) |
3,00,000 |
Since the least amount of the above three amounts is Rs. 1 lakh, Raghu will qualify for an HRA exemption of Rs. 1 lakh.
Can I Claim HRA if I Pay Rent to My Parents?
Yes, many salaried individuals live in their parents' home. If you receive HRA (house rent allowance) and live with your parents, you can still claim an exemption by providing proof of rent you have paid to your parents. To avail of this exemption, your parents must own the house and report the amount you give as rental income as income from residential property in their income tax returns.
What if I Forgot to Submit the Rent Receipts to My Employer?
One positive news is that you can claim HRA directly on your Income Tax Returns. If you haven't submitted your rent receipts to the HR department or if you forgot to do the same at the time of submitting proofs, you can still claim the HRA later when you file your Income Tax Returns. Just adjust your taxable income to include HRA and calculate the payable tax on the reduced taxable amount. If the excess tax amount has been deducted, you will also be able to claim a refund.
What If My Landlord Doesn't Provide Their PAN?
If you want to claim HRA exemption and have an annual rent of Rs. 1 lakh, your landlord's PAN card is mandatory; it cannot be avoided.
Can I Claim HRA If I Am Claiming Home Loan Deductions?
Yes, if you are a homeowner and repaying your home loan, you can still claim an HRA while living in a rented property. You can enjoy both the benefits to minimize your taxable amount.
Why Should I Use An Online HRA Calculator?
Several companies offer House Rent Allowance, or HRAs, to their employees to cover their rent-accommodation expenses. SaveTaxs' online HRA calculator can be helpful for anyone who receives a housing rent allowance from their company. Our tool guarantees accurate calculations and minimizes the chances of errors. We offer a trustworthy source for you to get an estimation of your HRA exemption. Whether you are a salaried individual or a professional, our tool will streamline the entire process for you and help you enhance your tax savings.
