House Rent Tax Exemption – Complete Guide to HRA & Deductions

Key Insights 

1. First, check if you qualify for House Rent Tax Exemption. If your salary includes HRA, use the official HRA exemption calculator to find out how much tax you can save in 2025.

2. Remember the three-part rule. Your exemption will be the lowest of these, the HRA you get, the amount your rent is above 10% of your salary, or 50% of your salary if you live in a metro city (40% for other cities).

3. To claim the deduction of HRA, give your rent receipts, rental agreement, and your landlord’s PAN to your employer if your yearly rent is over ₹1,00,000.

Do you pay a lot of rent? You may be able to lower your tax bill. Try the official HRA exemption calculator to find out how much you can claim for the house rent deduction in income tax section for 2025.

HRA acts like a financial cushion. It helps increase the house rent tax exemption limit, which reduces your financial burden by covering part of your rent, so you can keep more of your salary.

I am a salaried professional in Mumbai. My monthly salary is ₹80,000, with a basic salary of ₹40,000, and I pay ₹25,000 in rent. 

By using the HRA exemption calculator and following the house rent allowance rules under section 10(13A), I can claim a monthly exemption of ₹16,000. This helps me reduce my taxable income and may also match the expected house rent tax exemption 2025 budget benefits.

Eligibility Criteria for House Rent Tax Exemption 

Are you renting a home? Find out if you can lower your taxable income by checking these easy house rent tax exemption rules.

Here is the list of the eligibility criteria for the house rent tax exemption:
 

• You need to be a salaried employee and receive House Rent Allowance (HRA) as part of your pay.
• You should live in a rented property and pay rent.
• You cannot claim this exemption if you live in a house you own, or if your spouse or minor child owns it.
• You need to keep rent receipts or other proof of payment, such as bank transfer details, to support your claim.
• If you pay more than ₹1,00,000 in rent in a year, you must give your landlord’s Permanent Account Number (PAN) to your employer.

Review the basic requirements to see if you qualify, send in your rent receipts, and start saving on your house rent allowance today.

Bonus Tip: Do you know? Under Section 80CCD(1), you can claim a pension contribution deduction of up to ₹1,50,000, within the limits of 10% or 14% of income.

Required Documents for House Rent Tax Exemption

If you want to claim your HRA benefit, make sure you have these important documents. They will help you verify your rent payments and get your tax exemption.

Here is the list of documents for the house rent tax exemption:
 

Collect your rent receipts, rental agreement, and payment proofs to claim your HRA exemption and get the most out of your tax savings this year.

Bonus Tip: Do you know? Your HRA exemption depends on the minimum of HRA received, rent minus 10% salary, or 50% (metro) or 40% (non-metro) of salary.

How to Claim House Rent Deduction in ITR?

Mujhe pata lag gaya, par main kaise claim karun house rent ko ITR ke liye. Follow this easy guide to claim your house rent deduction when you file your ITR.

1. Invest in eligible funds:

• Make sure the mutual fund you choose is an ELSS that qualifies under Section 80C of the Income Tax Act, 1961.
• You can check the details on the fund house’s website or ask your financial advisor for help.

2. Maintain investment proofs:

• Hold on to receipts or statements from your fund house as proof of your investment.
• If you are salaried, give these proofs to your employer before the financial year ends to avoid higher TDS deductions.

3. File your ITR correctly: 

• When you file your ITR, declare your ELSS investments under Section 80C of the Income Tax Act, 1961.
• Use ITR-1 if you do not have capital gains, or ITR-2 if you have redeemed units and made gains.

4. Track your capital gains:

• If you sell your units after three years, make sure to calculate your long-term capital gains correctly.

5. Use tools to automate:

• Use tools like capital gains statements provided by platforms for accurate calculations.

If you want to claim a house rent deduction, give your rent receipts, rental agreement, and salary slips with HRA details to your employer before you file your ITR.

Conclusion

You can save more by learning how HRA rules work. Check your exemption with the calculator, give your employer valid rent receipts and your rental agreement, and file your ITR correctly to lower your taxable income and get the most tax benefit.

FAQs

Why No HRA in the New Tax Regime? 

The new tax regime does not offer House Rent Allowance (HRA) exemptions. This is because it aims for lower tax rates by removing most deductions and exemptions, including HRA.

Is there a limit to the rent I can pay my parents to claim HRA? 

There is no set maximum rent you can pay your parents to claim HRA. The exemption depends on the lowest of these three: the HRA your employer gives you, 50% of your basic salary plus Dearness Allowance if you live in a metro city (or 40% for non-metro cities), and the rent you pay minus 10% of your basic salary plus Dearness Allowance.

How is the House Rent Allowance (HRA) tax deduction calculated in India? 

You receive HRA from your employer. To calculate the exemption, subtract 10% of your salary from the actual rent you pay. If you live in a metro city, use 50% of your basic salary; for non-metro cities, use 40%.

How can I optimise my House Rent Allowance (HRA) to take advantage of tax exemptions if I live in a rented accommodation?  

To make the most of your HRA, give your employer your rent receipts and rental agreement. If your yearly rent is over ₹1 lakh, also share your landlord’s PAN.

How can I claim an HRA exemption?

To claim the HRA exemption, give your rent receipts to your employer. If you miss this step, you can still claim the exemption when you file your income tax return.
 

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