HRA (House Rent Allowance) is a salary component many employers pay to help cover rental costs, and a portion of it can be exempt from income tax under Indian tax rules โ but only if you actually pay rent and claim the exemption while filing under the Old Tax Regime (the New Regime does not allow HRA exemption). The exempt amount is the lowest of three values: actual HRA received, rent paid minus 10% of basic salary, or 50% of basic salary (for metro cities) / 40% (for non-metro cities).
No โ HRA exemption is only available under the Old Tax Regime. If you've opted for the New Regime, HRA is fully taxable as part of your salary regardless of rent paid.
You typically need rent receipts (or a rental agreement) and, for annual rent above โน1 lakh, your landlord's PAN details, which most employers require during the tax declaration process each year.
The exemption formula uses 50% of basic salary as one of the three comparison values for metro cities (Delhi, Mumbai, Kolkata, Chennai) versus 40% for all other cities, reflecting historically higher rental costs in metros.