HRA, or House Rent Allowance, is a component of many salaried employees' pay packages that can be partly or fully exempt from tax if the employee actually pays rent for accommodation. The exempt portion is calculated as the lowest of three specific amounts defined by tax rules — the actual HRA received, actual rent paid minus 10% of basic salary, or a percentage of basic salary depending on the city you live in.
This exemption is only available under the Old Tax Regime, and only if you're actually paying rent — if you own your home and don't pay rent, you generally can't claim HRA exemption even if it's part of your salary structure. To claim a larger HRA amount, you typically need to submit rent receipts, and if annual rent exceeds ₹1 lakh, your landlord's PAN details as well.