HRA (House Rent Allowance) Exemption under Section 10(13A)
HRA is exempt only if actually paid rent and living in rented accommodation. Landlord PAN mandatory if annual rent > ₹1L. Metro cities (Delhi, Mumbai, Kolkata, Chennai) get 50% cap; all others 40%. Available only in old regime.
- Formula: min(actual HRA, rent − 10% salary, 40%/50% salary)
- Landlord PAN mandatory if rent > ₹1L/year
- Only old regime; new regime disallows
- Rent to parents allowed if genuine transaction
- Cannot claim HRA + own-home Section 24(b) in same city (rare exception)
Definition
HRA Exemption
What is HRA Exemption?
HRA is exempt only if actually paid rent and living in rented accommodation. Landlord PAN mandatory if annual rent > ₹1L. Metro cities (Delhi, Mumbai, Kolkata, Chennai) get 50% cap; all others 40%. Available only in old regime.
Key rules to remember
- Formula: min(actual HRA, rent − 10% salary, 40%/50% salary)
- Landlord PAN mandatory if rent > ₹1L/year
- Only old regime; new regime disallows
- Rent to parents allowed if genuine transaction
- Cannot claim HRA + own-home Section 24(b) in same city (rare exception)
Worked example
Mumbai employee: basic ₹8L, HRA ₹3.6L, rent ₹40k/month. Rent paid ₹4.8L. 10% salary ₹80k. 50% (metro) ₹4L. Exempt = min(₹3.6L, ₹4L, ₹4L) = ₹3.6L (entire HRA exempt).
Which ITR form applies
- ITR-1 (Sahaj) — Up to ₹50 lakh total income
- ITR-2 — No upper limit
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Frequently asked questions
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