What is the HRA exemption formula?
HRA exemption is the minimum of: (1) Actual HRA received, (2) 50% of basic for metro or 40% for non-metro, and (3) Rent paid minus 10% of basic salary. The lowest of these three is your exemption.
Which cities are considered metro for HRA?
Only four cities are classified as metro for HRA: Delhi, Mumbai, Kolkata, and Chennai. All others — including Bangalore, Hyderabad, Pune, Lucknow, and Ahmedabad — are non-metro, even if they are large cities.
Can I claim HRA if I live in my own house?
No. HRA exemption is only available if you are paying rent for accommodation. If you live in your own house or your parents' house (and don't pay rent), the entire HRA from your employer is taxable.
Is landlord PAN required for HRA claim?
Yes, if your annual rent exceeds ₹1 lakh (₹8,333/month), you must submit your landlord's PAN to your employer. Without it, your employer may not grant the exemption. You can get a valid receipt with PAN using our free generator.
What if my HRA is more than my rent?
The excess HRA over rent (minus 10% of basic) becomes taxable. For example, if you receive ₹20,000 HRA but the formula gives ₹15,000 exemption, the remaining ₹5,000 is added to your taxable income.
Can I claim HRA if I pay rent to parents?
Yes, you can pay rent to your parents and claim HRA exemption — but it must be genuine. Your parents must declare this rental income in their ITR. A proper rent agreement and receipts are advisable to avoid scrutiny.