Glossary term

HRA

Salary component for tenants that's partially tax-exempt under Section 10(13A) — available only in the Old Regime.

House Rent Allowance (HRA) is a salary component paid to employees who rent their homes. The exempt portion — under Section 10(13A) — is the lowest of: actual HRA, 50% of basic salary (metro) or 40% (non-metro), or rent paid minus 10% of basic.

HRA is one of the largest tax breaks available under the Old Regime for tenants in metro cities. It's removed under the New Regime, which is why salaried renters with significant HRA often prefer the Old Regime.