How much house rent is tax free?

In India, the amount of house rent that is tax-free depends on various factors such as the individual's salary, the city of residence, and whether the individual receives a House Rent Allowance (HRA) as a part of their salary. The tax exemption for house rent is determined under Section 10(14) of the Income Tax Act, 1961, and Rule 2A of the Income Tax Rules, 1962.

What is maximum HRA allowed?

Under Section 10(14) of the Income Tax Act, the amount of House Rent Allowance (HRA) that is allowed as a tax exemption depends on the least of the following three amounts: 1. Actual HRA received from the employer. 2. Rent paid minus 10% of the salary (Basic salary + Dearness Allowance, if applicable). 3. 50% of the salary

Can I claim for HRA exemption if I am living with my parents?

Yes, you can claim for HRA exemption even if you are living with your parents, provided you meet certain conditions: you must actually pay rent to your parents, your parents must include the rental income from you in their income tax return, your parents must own the property in which you are residing, even though you are living with your parents, for tax purposes, they are considered your landlord, it is advisable to maintain proper documentation of the rent payments made to your parents, such as bank transfers or receipts, to substantiate the rent payment claim.

Is it necessary to submit my landlord’s PAN card to claim HRA deduction?

To claim tax exemption on HRA (House Rent Allowance), as a taxpayer, you need to submit your rent receipts as supporting documents. Additionally, in cases where the annual rent paid for the housing unit exceeds Rs. 1 lakh, you are required to provide the PAN Card details of your landlord/landlady along with the rent receipts.

Who Cannot claim HRA exemption?

Self-employed individuals, including freelancers, consultants, and business owners, cannot claim HRA exemption since they do not receive HRA as a part of their income.

How to Calculate HRA Tax Exemption Online in India

How is HRA Exemption Calculated_Banner_WC

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What is HRA or House Rent Allowance?_WC

What is HRA or House Rent Allowance?

HRA or House Rent Allowance is a component of your salary provided by your employer to cover the cost of rented accommodation. This cost is part of your salary credited by the organisation and can be claimed as a tax exemption under Schedule III (Table: S. No. 11) of the Income Tax Act, 2025. If you reside in a metropolitan city, you can claim up to 50% of your salary as HRA.

While salaried individuals commonly receive HRA benefits, self-employed individuals may also claim it under Section 134 of the Income Tax Act, 2025.

However, it should be noted that the new tax regime does not offer any HRA exemptions. Therefore, selecting a tax regime that aligns with your financial goals is essential.

How is House Rent Allowance Calculated?_WC

What are the things to Keep in Mind While Calculating HRA Exemptions

Here are certain conditions to bear in mind when you want to calculate your HRA exemption amount:

If you stay in a metro city, you may be eligible to claim up to 50% of your base salary. If you live in a non-metro city, you can stand to claim up to 40% of your base salary.
To be able to claim HRA, one of the main pre-requisites is that you reside in a rental property.
You can claim an exemption if you live with your parents and pay them rent. To be able to do so, your parents should be the owners of the property and show the rent they receive as rental income in their tax returns.
Some other factors that can help your HRA exemption eligibility are:
- Your pay slip should carry the HRA details included in your pay
- Your rental receipt should bear your name

Can one Claim Both HRA and Home Loan Tax Exemption?_WC

Can One Claim both HRA and Home Loan Tax Exemptions?

Aspiring homebuyers may opt for a Home Loan to fund the purchase of their real estate property. Housing loans not only make homeownership accessible and feasible but also provide Home Loan tax benefits, allowing borrowers to save funds.

Under Section 123 of the Income Tax Act, 2025, one can claim tax exemptions up to a maximum of Rs.1.5 Lakh on principal repayments and under Section 22 one can claim tax exemptions up to a maximum of Rs.2 Lakh on payments made towards the interest component. Thus, a taxpayer can save up to Rs.3.5 Lakh per annum through a Home Loan. Further, financial co-applicants who are also co-borrowers of the property, can claim these tax exemptions separately. This way they can save up to Rs.7 Lakh in taxes each year by availing of a Home Loan.

You can claim both HRA and Home Loan tax benefits in the same year, even if the properties are in the same city. However, you need to ensure that you have valid reasons for not residing in the purchased house. Maintain proper documentation, such as the sales deed and completion certificate, as your claims may be reviewed by tax authorities

Documents Required to Claim HRA Exemption

What are the Documents Required for HRA Exemption

To be able to claim your HRA exemption, you should have the following documents:

Rental agreement (with details about the property, address, duration, etc. included)
Rental receipt
Owner’s PAN Card details, if the annual rent exceeds Rs.1 Lakh
Revenue stamp along with the owner’s signature

*Terms and conditions apply.

Frequently Asked Questions

If you live in a metro city, you may be able to claim up to 50% of your base salary, and if your place of residence is a non-metro city, you stand the chance to claim up to 40% of your base salary.

Aside from this, you can claim the entire amount that is booked under HRA in your salary break-up.

You may, if you pay rent to your parents, and if your parents are the legal owners of the property. Your parents will be required to declare the rent they receive as rental income in their income tax returns.

You may be asked to submit your property owner’s PAN Card at the time of claiming exemptions if your annual rent payable exceeds Rs.1 Lakh.

Disclaimer:

Disclaimer

The information remains subject to change depending on the laws and government guidelines, applicable at the time being. However, Bajaj Housing Finance Limited (‘BHFL’) is under no obligation to update or keep the information current. Users are advised to seek independent legal and professional advice before acting on the basis of the information contained in the Website. Placing reliance on the aforementioned information shall always be the sole responsibility and decision of the User and the User shall assume the entire risk of any use made of this information.

In no event shall BHFL or the Bajaj Group, its employees, directors or any of its agents or any other party involved in creating, producing, or delivering this Website shall be liable for any direct, indirect, punitive, incidental, special, consequential damages (including lost revenues or profits, loss of business or loss of data) or any damages whatsoever connected to the User’s reliance on the aforementioned information.

How is HRA Exemption Calculated?_RAC_WC