What is HRA exemption?
Short answer
HRA exemption lets an employee on the old tax regime exclude part of house rent allowance from tax: the least of the HRA received, 50% or 40% of basic, and rent paid minus 10% of basic.
The three limits
- The house rent allowance actually received.
- 50% of basic salary if the employee lives in Delhi, Mumbai, Chennai or Kolkata, otherwise 40%.
- Rent paid minus 10% of basic salary.
Example
Basic ₹50,000 a month, HRA ₹25,000 and rent ₹20,000 in a metro: the limits are ₹3,00,000, ₹3,00,000 and ₹1,80,000 a year, so ₹1,80,000 is exempt and ₹1,20,000 of HRA is taxable.
In AdviHR
AdviHR calculates the exemption for old-regime employees from their declared rent.
Frequently asked questions
Is HRA exempt under the new regime?
No. HRA exemption applies only under the old regime.
Related terms
How sure are we? These figures use the same rules AdviHR payroll applies. We publish what has been checked against an official source and what has not, on the statutory accuracy page.
General information, not legal or tax advice. Confirm against the official notification and your adviser.