HRA(HouseRentAllowance)

Tax

Definition

A component of salary that provides tax exemption to salaried employees who pay rent. The exemption is the minimum of: actual HRA received, 50% of salary (40% for non-metro cities), or rent paid minus 10% of salary. HRA exemption is available under the old tax regime.

Example

If your basic salary is Rs 5 lakh, HRA received is Rs 2 lakh, and rent paid is Rs 1.8 lakh per year in a metro city, the exemption is calculated as the minimum of the three conditions.

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