For salaried employees, House Rent Allowance (HRA) is one of the most powerful tax-saving tools.
Even if you own a house, under certain conditions, you can still claim HRA or home loan benefits.

Here’s a complete explanation of how HRA exemptions work, calculation rules, and how to combine it with home loan deductions for maximum savings.

HRA Exemption – Section 10(13A)

The least of the following three is exempt from tax:
1️⃣ Actual HRA received from employer.
2️⃣ 50% of salary (for metro cities) or 40% (non-metro).
3️⃣ Rent paid minus 10% of salary.

Salary = Basic + DA (if part of retirement benefits)

Documents Required

• Rent receipts with landlord’s name, PAN, and address.

• Lease agreement (if available).

• PAN of landlord (mandatory if rent > ₹1 lakh/year).

HRA for Those Living with Parents

Yes, you can pay rent to your parents and claim HRA — provided:

• Actual transfer of rent occurs via bank.

• Parents declare rent income in their ITR.

Claiming HRA and Home Loan Benefits Together

You can claim both if:

• You work in one city and own a house in another (and pay rent there).

• You have a loan for self-occupied house but live in rented accommodation elsewhere.

Deductions available:

• Section 24(b): Interest on home loan up to ₹2 lakh.

• Section 80C: Principal repayment up to ₹1.5 lakh.

Conclusion

Smart HRA and housing deductions can save thousands in taxes annually.
Always maintain receipts, agreements, and payment proofs to avoid disallowance.

Continue reading:
→ Top Deductions Under Section 80C to 80U
→ Old vs New Tax Regime: Which Is Better for FY 2024–25
→ Complete Guide to Filing Income Tax Returns