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How HRA Tax Exemption is Calculated
House Rent Allowance (HRA) received by salaried employees is exempt from income tax under Section 10(13A) read with Rule 2A of the Income Tax Rules, 1962. The exempt amount is determined by taking the lowest of the following three statutory limits:
The Three Rule 2A Conditions:
- Actual HRA Received: Total House Rent Allowance received from your employer.
- Rent Paid − 10% of Salary: Actual rent paid for residential accommodation, minus 10% of statutory salary (Basic + DA).
- City Percentage Ceiling: 50% of statutory salary if situated in Delhi, Mumbai, Kolkata, or Chennai; or 40% of statutory salary in any other city across India.
Old vs New Tax Regime for HRA Claims
| Tax Parameter | Old Tax Regime | New Tax Regime (Section 115BAC) |
|---|---|---|
| HRA Exemption | Eligible under Section 10(13A) | Not available (Full HRA is taxable) |
| Standard Deduction | ₹50,000 | ₹75,000 (FY 2024-25 onwards) |
| Section 80C & 80D | Allowed (up to ₹1.5L + health) | Disallowed |