PeopleOS calculates HRA exemption automatically each payroll based on employee Form 12BB declarations.
Start freeHRA exemption is the LEAST of: (1) actual HRA received from employer, (2) 50% of Basic + DA for metro cities (Delhi, Mumbai, Kolkata, Chennai) or 40% for non-metros, or (3) actual rent paid minus 10% of Basic + DA. Whichever is smallest is the exempt amount.
For HRA exemption purposes under Section 10(13A), only four cities are classified as metros: Mumbai, Delhi, Kolkata, and Chennai. Bengaluru, Hyderabad, Pune, Ahmedabad, and other Tier-1 cities are treated as non-metro for HRA — only 40% of Basic+DA is the metro multiplier limit.
No. HRA exemption under Section 10(13A) is only available under the Old tax regime. The New regime offers a higher standard deduction (₹75,000 for FY 2025-26) but disallows most exemptions including HRA, LTA, and most Section 80 deductions. Compare both regimes annually before deciding.
For monthly rent up to ₹3,000 — only a self-declaration. For rent above ₹3,000/month — rent receipts and (if rent exceeds ₹1 lakh annually) the landlord's PAN. Submit to HR via Form 12BB. Lease agreement is not strictly required by IT Act but most employers ask for it as supporting documentation.
Yes — pay rent to your parents, get genuine rent receipts, and the parent declares the rent as their income (subject to tax in their hands at their slab rate). Avoid token amounts; the rent should reflect fair market value or it can be challenged. Both you and your parents must maintain proper documentation.