Section 10(13A) | FY 2024-25
House Rent Allowance (HRA) is a component of salary provided by employers to employees to meet the cost of renting a home. Under Section 10(13A) of the Income Tax Act, a portion of HRA can be claimed as a tax exemption, reducing your overall tax liability. This benefit is available only to salaried individuals who pay rent for their accommodation.
The HRA exemption is calculated as the minimum of the following three amounts:
Actual HRA received from your employer during the financial year.
50% of (Basic Salary + DA) if you live in a metro city (Delhi, Mumbai, Chennai, Kolkata), or 40% for non-metro cities.
Actual Rent Paid minus 10% of (Basic Salary + DA). If this value is negative, no exemption is available.
The Income Tax Act classifies only four cities as metro for HRA purposes:
This distinction is important because it directly affects the second component of your HRA exemption calculation.
HRA exemption under Section 10(13A) of the Income Tax Act allows salaried employees who receive House Rent Allowance as part of their salary to claim a tax exemption on the HRA amount, subject to certain conditions and limits. The exemption is the minimum of three components: actual HRA received, a percentage of basic salary, and rent paid minus 10% of basic salary.
HRA exemption is the minimum of three components: (1) Actual HRA received from employer, (2) 50% of Basic + DA for metro cities or 40% for non-metro cities, and (3) Actual rent paid minus 10% of Basic + DA. The lowest of these three values is your tax-exempt HRA amount.
For HRA exemption purposes, only four cities are classified as metro: Delhi, Mumbai, Chennai, and Kolkata. All other cities, including Bangalore, Hyderabad, Pune, Chandigarh, and Panchkula, are considered non-metro. Metro city residents get a higher percentage (50% vs 40%) for the second component of HRA calculation.
No, you cannot claim HRA exemption if you live in your own house. HRA exemption is only available when you are paying rent for a residential accommodation. You must actually pay rent to claim the exemption. However, if you own a house in a different city and pay rent where you work, you may be eligible for both HRA exemption and home loan deductions.
If your annual rent exceeds ₹1,00,000, rent receipts are mandatory. Additionally, if rent exceeds ₹1,00,000 per year, you must provide the landlord's PAN number. For rent below ₹1,00,000 per year, a self-declaration may suffice, but it is always recommended to maintain proper rent receipts for your records.
Yes, you can claim both HRA exemption and home loan deductions simultaneously, provided you meet the conditions for both. For example, if you own a house in one city but live on rent in another city for work, you can claim HRA exemption for the rent paid and also claim deductions under Section 24(b) for home loan interest and Section 80C for principal repayment.