HRA exemption = Minimum of: (1) Actual HRA received, (2) Rent paid − 10% of basic salary, (3) 50% of basic salary (metro) or 40% of basic salary (non-metro). All three are calculated monthly. Example: Basic ₹40K, HRA ₹20K, Rent ₹25K, Metro: C1=₹20K, C2=₹21K, C3=₹20K. Exempt = ₹20,000/month.
HRA exemption available in New Tax Regime?▼
No. HRA exemption under Section 10(13A) is only available in the Old Tax Regime. If you have opted for the New Tax Regime, the entire HRA received is taxable. This is one reason high-rent-paying employees (especially in metros) often find Old Regime more beneficial.
Is HRA available for rent paid to parents?▼
Yes! You can pay rent to your parents and claim HRA exemption. However: (1) Rent agreement and receipts must exist, (2) Your parents must declare this rent as income in their ITR, (3) TDS may apply if annual rent exceeds ₹1L. Beneficial if parents are in lower tax bracket.