Three-Part Calculation Formula
Under CBDT guidelines, your exempt HRA is the lowest value from these calculations:
- Actual HRA received from employer
- Rent paid - 10% of basic salary
- 50% of basic (metro) / 40% of basic (non-metro)
Real Indian Salary Scenarios
Mumbai Scenario
Basic: ₹75,000/month
HRA: ₹25,000/month
Rent: ₹20,000/month
Exempt HRA: ₹12,500/month
Formula: Minimum of ₹25,000, ₹12,500, ₹20,000-₹7,500Ahmedabad Scenario
Basic: ₹50,000/month
HRA: ₹18,000/month
Rent: ₹12,000/month
Exempt HRA: ₹10,000/month
Formula: Minimum of ₹18,000, ₹7,000, ₹20,000Important Compliance Notes
- Exemption valid only for rented accommodation
- Requires rent receipts for claims >₹1 lakh/year
- PAN mandatory for landlords if rent >₹50,000/month
- Not applicable for company-owned housing
This is an educational tool. Actual exemption may vary based on ITR scrutiny.