Rent Receipts


The HRA (House rent allowance) is not fully taxable, unlike the basic salary. A section of HRA is exempt from tax with certain conditions. The exemption on HRA is deducted from the total income tax. With this, any employee can save their tax.

The exemption on HRA is valid only on all rent receipts or rent agreements given by the landlord. If the rent is more than Rs 1 lakh annually (more than 8333 INR monthly) then it is necessary that the employee report the PAN card of the landlord.

Rent Receipt Format


How is HRA Calculated with examples?

The minimum of the below three calculations will be exempted from Tax.

Calculation 1) Annual HRA
Calculation 2) Annual Actual Rent Paid - 10% of Annual basic pay
Calculation 3) 50% of salary in metro cities, 40% of salary in non-metro cities

For Example - Suppose a person's monthly basic salary is 15 thousand rupees, and 7 thousand rupees is the HRA component. The person lives in a rented house in the metro city and pays Rs 8,400.

Calculation 1) Annual HRA = 84000

Calculation 2) Annual Actual Rent Paid - 10% of Annual basic pay
= (8400 X 12) - (15000 X 12 X 0.1) = 100800 - 18000 = 82800
Calculation 3) 50% of basic salary in metro cities, 40% of basic salary in non-metro cities

= (15000 X 12) x 0.5 = 90000

The minimum of the above three calculations is 82800. So, 82800 will be exempted from Tax, and 84000-82800 = 1200 will come under taxable income.

What is not allowed? -

  1. Tax exemption can be availed only by the person who is getting salary and HRA component in his salary. 
  2. He is also staying at a rented house. Keep in mind that HRA is fully taxed in this case.
  3. Self Employed Professionals cannot take the HRA exemption.
  4. If you are living with your parents then they can be claimed HRA by renting. The only condition is that your family owns that property. But if your family is also in a rented house and paying the rent then HRA cannot be claimed.
  5. You cannot claim HRA by renting to your spouse
  6. If you are living in another city due to job posting then you can also claim home loan with HRA. Rs 1.5 lakh can be claimed on principal repair and Rs 2 lakh on interest paid.
  7. If you own a house in the same city, you cannot claim HRA.