HRA Exemption: How Much Rent Saves Tax

Every month you pay rent and don't claim HRA properly, you're leaving money on the table — money that's rightfully yours to keep.
HRA exemption is the least of three numbers: actual HRA received, rent paid minus 10% of basic salary, or 50% of basic (metro) / 40% (non-metro).
Example: basic salary ₹40,000/month, HRA ₹20,000/month, rent ₹18,000/month in Mumbai. Exempt amount works out to ₹14,000/month — ₹1,68,000 tax-free for the year.

What this means for you

• At the 20% slab, that's about ₹33,600 saved in tax this year — real money, not a rounding error.
• At the 30% slab, the same exemption saves roughly ₹50,400 annually.
• No rent agreement or PAN of landlord on file (for rent above ₹1 lakh/year) means your claim can get rejected at filing time.

What you can do

• Share a valid rent agreement and landlord PAN with your HR before the proof submission deadline.
• Run your own numbers using the three-way formula — don't assume your full HRA is automatically exempt.

Rent already costs you enough every month — make sure the tax system pays some of it back.

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