TL;DR for CAs
- HRA exemption is least of three statutory limits under Section 10(13A).
- Requires rent receipts and landlord PAN above threshold.
- Only available in the old tax regime.
What it is
House Rent Allowance exemption helps salaried employees living in rented accommodation reduce taxable salary.
Who it applies to
Employees receiving HRA who pay rent and opt for the old regime.
Key provisions
- Least of: actual HRA, rent paid minus 10% of salary, 40%/50% of salary based on city
- Salary for HRA typically means basic + DA
- Landlord PAN if rent exceeds Rs. 1 lakh/year
Practical tips for CAs
Collect rent agreement, cancelled cheques, and landlord PAN. Cross-check metro vs non-metro classification.
Common mistakes
Claiming HRA while living in own house; missing landlord PAN; claiming under new regime.
For general guidance only. Verify with the latest Finance Act, GST notifications, and ICAI guidance notes before advising clients.