Question 1

How is HRA exemption calculated?

Accepted Answer

HRA exemption is the minimum of three values: (1) actual HRA received, (2) actual rent paid minus 10% of basic salary, and (3) 50% of basic salary for metro cities or 40% for non-metro cities.

Question 2

Which cities are considered metro cities for HRA?

Accepted Answer

Delhi, Mumbai, Kolkata, and Chennai are classified as metro cities. Residents of these cities can claim 50% of basic salary as HRA exemption. All other cities are considered non-metro, allowing 40% exemption.

Question 3

Can I claim HRA if I pay rent to a family member?

Accepted Answer

Yes, you can pay rent to family members and claim HRA exemption, provided the arrangement is genuine, rent is transferred via bank, and the family member declares it as income in their ITR. Rent to a spouse is not allowed.

Question 4

What if I don't receive HRA from my employer?

Accepted Answer

If you don't receive HRA as part of your salary, you can still claim rent deduction under Section 80GG, subject to conditions and a maximum deduction of ₹5,000 per month.

Question 5

Is the taxable HRA added to my income?

Accepted Answer

Only the taxable portion (HRA received minus HRA exempt) is added to your gross taxable income. The exempt portion is not taxed.

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