What is HRA (House Rent Allowance)?

Definition

HRA (House Rent Allowance) is a fixed monthly allowance paid by an employer to an employee toward rented accommodation. It is fully taxable if the employee does not pay rent; if rent is paid, the exemption under Section 10(13A) of the Income Tax Act applies.

HRA exemption rule (Section 10(13A))

The exempt portion of HRA is the lowest of:

1. Actual HRA received from the employer.
2. Rent paid minus 10% of basic salary (and DA, if applicable).
3. 50% of basic salary for metro cities (Delhi, Mumbai, Kolkata, Chennai); 40% for non-metros.

When HRA exemption applies

• The employee actually pays rent for accommodation they live in.
• HRA is a separate, declared component of the salary structure.
• If annual rent > ₹1 lakh, the landlord's PAN must be furnished.
• Available only under the old tax regime — the new regime forfeits this exemption.

HRA in Texlaculture HRMS

Texlaculture computes HRA exemption every month based on the rent declared by the employee, validates against uploaded rent receipts, and adjusts TDS projection accordingly. Year-end Form 16 reflects the exempt and taxable splits.