Question 1

How is HRA exemption calculated?

Accepted Answer

HRA exemption under Section 10(13A) is the LEAST of: (1) actual HRA received, (2) rent paid minus 10% of basic+DA, (3) 50% of basic+DA in a metro city (Delhi, Mumbai, Kolkata, Chennai) or 40% elsewhere. The remainder of HRA received is taxable.

Question 2

Which cities count as metro for HRA?

Accepted Answer

Only Delhi, Mumbai, Kolkata and Chennai are treated as metro cities for the 50% HRA limit. All other cities, including Bengaluru, Hyderabad and Pune, use the 40% limit.

Question 3

Can I claim HRA exemption under the new tax regime?

Accepted Answer

No. HRA exemption is only available under the old tax regime. The new regime does not allow this exemption.