Calculate exact House Rent Allowance tax exemption based on the 3-condition rule.
House Rent Allowance (HRA) is a salary component paid by employers to employees to meet accommodation expenses. It is eligible for tax exemption under Section 10(13A) of the Income Tax Act.
The exemption is the minimum of three amounts: 1) Actual HRA received, 2) 50% of Basic Salary + DA for metro cities (40% for non-metros), or 3) Actual rent paid minus 10% of Basic Salary + DA.
For HRA calculation, only four cities are considered Metros: Delhi, Mumbai, Kolkata, and Chennai.
Yes, you can claim HRA exemption by paying rent to your parents. They will need to show this rent as income from house property in their tax returns.