📖 Understanding HRA Tax Exemption

House Rent Allowance (HRA) is a component of salary that employers provide to help employees with rental expenses. Under Section 10(13A) of the Income Tax Act, you can claim tax exemption on HRA if you live in rented accommodation.

The exempt HRA amount is the minimum of three calculations: (1) Actual HRA received, (2) Rent paid minus 10% of Basic+DA salary, (3) 50% of Basic+DA for metro cities (40% for non-metro). Any HRA above this exempt amount is fully taxable.

To claim HRA exemption, you need rent receipts, and if annual rent exceeds ₹1 lakh, you must provide the landlord's PAN. If your landlord doesn't have PAN, you need a declaration. Keep rent receipts and bank transfer records for proof.

You can claim both HRA and home loan interest deduction if you live in a rented house while your own house is in another city. You can also pay rent to parents (they must declare it as income). Always consult a tax advisor for complex situations.