How to Correctly Calculate and Claim HRA Exemption to Optimize Tax

House Rent Allowance (HRA) is one of the most effective tax-saving components for salaried employees. However, many fail to claim the correct exemption due to mathematical errors or missing landlord details.

The Three Rules

The exempt HRA amount is the minimum of: 1. Actual HRA received, 2. Rent paid minus 10% of basic salary, or 3. 50% of basic salary in metro cities (40% in non-metro). Keep rent receipts and valid rent agreements ready to back your claim during assessment.