House Rent Allowance (HRA) is one of the most valuable tax-saving tools available to salaried employees in India. If you're paying rent and your employer provides HRA as part of your salary, you can claim a significant exemption — potentially saving ₹20,000 to ₹1,00,000+ in taxes every year.
Yet many tenants don't claim it simply because they don't know how. This guide walks you through everything, step by step.
What is HRA Exemption?
Under Section 10(13A) of the Income Tax Act, the HRA component of your salary is exempt from tax — up to a limit. The exemption is the lowest of these three amounts:
Example Calculation
Let's say you live in Noida and your monthly figures are:
- Basic salary: ₹50,000/month
- HRA from employer: ₹20,000/month
- Actual rent paid: ₹22,000/month
- Option A: ₹20,000 (actual HRA)
- Option B: 40% of ₹50,000 = ₹20,000 (Noida is non-metro)
- Option C: ₹22,000 - 10% of ₹50,000 = ₹22,000 - ₹5,000 = ₹17,000
Exemption = ₹17,000/month = ₹2,04,000/year tax-free
Metro cities (Delhi, Mumbai, Kolkata, Chennai) get 50% of basic salary as Option B. All other cities including Bangalore, Hyderabad, Pune, Noida, Gurgaon get 40%.
Step-by-Step — How to Claim HRA
Check your salary slip
Confirm that HRA is a separate component in your CTC. If your employer doesn't provide HRA, you cannot claim this exemption (but may be able to claim under Section 80GG instead).
Collect rent receipts for every month
You need rent receipts for each month of the financial year. Each receipt must include: landlord name, tenant name, property address, rent amount, month, and date of payment.
Get your landlord's PAN (if rent > ₹1 lakh/year)
If your annual rent exceeds ₹1,00,000 (i.e., more than ₹8,333/month), you must submit your landlord's PAN to your employer. This is mandatory under the Income Tax Act.
Submit Form 12BB to your employer
Form 12BB is the declaration form you submit to your employer's HR/finance team, usually at the start of the financial year or in January-February. Attach your rent receipts and landlord's PAN.
File your ITR with HRA details
When filing your Income Tax Return (ITR-1 for salaried), ensure the HRA exemption is reflected correctly in the salary section. Your Form 16 from your employer should show the exemption.
What Should a Valid Rent Receipt Include?
The Income Tax department is specific about what constitutes a valid rent receipt. Make sure it includes:
- Date of issue
- Tenant's full name
- Landlord's full name
- Property address
- Rent amount in words and figures
- Month for which rent is paid
- Landlord's signature (or stamp)
- Revenue stamp if amount exceeds ₹5,000
Rentiz generates professionally formatted rent receipts that are accepted for HRA claims. Go to My Flat → Download Rent Receipt → select month and year. The receipt includes all required fields including the HRA compliance note.
Common Mistakes to Avoid
- Paying rent in cash: The Income Tax department prefers digital payment trails. Pay via UPI or bank transfer so you have proof.
- Not collecting receipts every month: Start collecting from April onwards — don't wait until January when your employer asks for proof.
- Paying rent to a family member: You cannot claim HRA if you pay rent to your spouse. Paying rent to parents is allowed, but only if they declare it as rental income in their ITR.
- Missing the landlord's PAN: If your rent exceeds ₹8,333/month, you must have your landlord's PAN. Without it, you risk losing the exemption.
What if Your Employer Doesn't Provide HRA?
If HRA is not part of your salary structure, you can still get some tax relief under Section 80GG. This allows a deduction of the lowest of:
- ₹5,000 per month (₹60,000/year)
- 25% of total income
- Rent paid minus 10% of total income
Quick Summary
- ✅ HRA exemption is under Section 10(13A) — only for salaried employees
- ✅ Collect rent receipts every month — start in April
- ✅ Get landlord's PAN if annual rent > ₹1 lakh
- ✅ Submit Form 12BB to your employer by January-February
- ✅ Pay rent via UPI or bank transfer for a digital trail
- ✅ If no HRA in salary, claim under Section 80GG instead
Download Your Rent Receipt in One Tap
Rentiz generates HRA-compliant rent receipts for any month. Your landlord doesn't need to do anything — you download it directly from the app.
Try Rentiz Free →