House Rent Allowances (HRA) is given by the employer to meet the cost of rent paid by you for your home. It is basically a part of the taxable salary and it is received irrespective of the type of property employee resides in. Whether one stays in the rented accommodation or resides in his own house, he will get the HRA if his employer chooses to offer the allowance. If HRA received from employer is claimed by you, you are eligible for an Income Tax exemption under Section 10(13A) of the Income Tax Act,1961.

The minimum of the following three is available as exemption from your income:

1. The actual HRA received from your employer.
2. The actual rent paid by you for the house, minus 10% of your salary (this includes basic + dearness allowance, if any)
3. 50% of your basic salary (if you live in a metro) or 40% of your basic salary (if you live in a non-metro)

The minimum of above three is allowed as income tax exemption on HRA and the remaining HRA is added to your income and subject to income tax. But before claiming the exemption you should first check, whether you met all the conditions for claiming IT benefit on HRA. Here are the conditions:
• You receive HRA as part of your salary.
• You pay the rent
• You stay in the rented house for which you pay the rent
• You do not own the house for which you are paying the rent

Other condition which should be kept in mind

• You can claim exemption for the rent paid to your parents, provided you actually pay the rent. You should get rent receipts for the same. Also, your parents would need to declare this income in their IT returns.
• You can not claim rent paid to your spouse.
• Only one of the spouses can claim HRA exemption – not both.