Understanding HRA Exemption for FY 2024–25

Rohan Sharma, a 32-year-old marketing professional living in Pune, earns an annual salary of ₹12,00,000. He stays in a rented apartment and pays a monthly rent of ₹25,000. Rohan receives a ***House Rent Allowance (HRA)*** of ₹3,60,000 per year as part of his salary package. He wants to understand how much HRA exemption he can claim while filing his Income Tax Return for FY 2024–25.

Salary Details of Rohan Sharma

HRA Exemption Rules

As per Section 10(13A) of the Income Tax Act, the exempt portion of HRA is the lowest of the following three amounts:

1. Actual HRA received
2. 50% of salary (for metro cities) or 40% (for non-metro cities)
3. Rent paid minus 10% of salary (Basic + DA)

Let’s calculate Rohan’s exemption step by step.

Step 1: Actual HRA Received = ₹3,60,000

Step 2: 40% of Salary (Non-Metro City — Pune) = 40% of (₹6,00,000 + ₹60,000) = ₹2,64,000

Step 3: Rent Paid — 10% of Salary = ₹3,00,000–10% of (₹6,00,000 + ₹60,000) = ₹3,00,000 — ₹66,000 = ₹2,34,000

Comparison Table: HRA Exemption Calculation

Visual Representation of HRA Exemption

Key Insights

• Rohan can claim an exemption of ₹2,34,000 on his HRA for FY 2024–25.
• The remaining ₹1,26,000 becomes taxable under “Income from Salary.”
• To claim this, Rohan must submit rent receipts and landlord PAN (if rent exceeds ₹1,00,000 annually).

With accurate HRA computation, Rohan can save ₹7,000–₹10,000 in taxes depending on his tax slab.

If you’re unsure about how to compute HRA exemption or file your return, you can download the TaxBuddy mobile app for a simplified, secure, and seamless tax filing experience. It offers real-time error detection, personalized support, and automated tax computation.

FAQs

Q1. What is House Rent Allowance (HRA)? HRA is a part of your salary provided by your employer to meet rental expenses. It helps you claim tax exemption under Section 10(13A).

Q2. Who can claim HRA exemption? Any salaried employee living in rented accommodation and receiving HRA as part of their salary can claim the exemption.

Q3. How is HRA exemption calculated? HRA exemption is the least of:

1. Actual HRA received
2. 50% of salary for metro cities / 40% for non-metro cities
3. Rent paid minus 10% of salary

Q4. Can I claim HRA if I live with my parents? Yes, if you pay rent to your parents and they declare it as rental income in their ITR, you can claim HRA exemption.

Q5. What documents are required to claim HRA? You’ll need rent receipts, a rent agreement, and your landlord’s PAN (if rent exceeds ₹1 lakh per annum).

Q6. Can HRA be claimed under the new tax regime? No, HRA exemption is not available under the new tax regime (Section 115BAC). It can only be claimed under the old regime.

Q7. What if my employer doesn’t provide HRA? If you pay rent but don’t receive HRA, you can claim deduction under Section 80GG, subject to conditions.

Q8. How does TaxBuddy help in HRA computation? TaxBuddy’s AI-driven system automates HRA computation by importing salary data, rent details, and deductions to ensure error-free filing.

Q9. Can I use the TaxBuddy mobile app for HRA claims? Yes, you can claim HRA exemptions easily through the TaxBuddy mobile app. It automatically calculates HRA exemption and updates your tax summary.

Q10. Does TaxBuddy offer both self-filing and expert-assisted plans for ITR filing? Yes, TaxBuddy offers both self-filing and expert-assisted plans for ITR filing. Users can either file independently using the AI-driven platform or get assistance from tax experts for complete accuracy and peace of mind.