House Rent Allowance (HRA) remains an important component of salary taxation for employees who live in rented accommodation.
This visual guide compares the HRA framework under the Income Tax Act, 1961 with the Income Tax Act, 2025, including the treatment of metro cities and the calculation of the exemption.
HRA at a Glance
The infographic below covers:
- the conditions for claiming HRA exemption;
- how the exempt amount is calculated;
- the old and new framework;
- changes relating to the definition of metro cities; and
- a worked Bengaluru example.
[VISUAL: resource-04-hra-income-tax-act-2025.jpeg]
Key Takeaway
HRA exemption depends not simply on the HRA component of salary, but also on factors such as actual rent paid, salary for HRA purposes and the location of the rented accommodation.
The accompanying visual provides a quick comparison of the framework and an illustrative calculation.
This resource is intended for general informational and educational purposes. Tax treatment depends on the applicable law, tax regime and individual circumstances. Please consult a qualified tax professional for advice relating to a specific situation.