House Rent Allowance (HRA) is an allowance which you receive from your company for paying the rent of your rented property. You can take tax exemption for minimum of the below three amounts:
For the purpose of above calculations, salary would be taken as Basic Pay + D.A. (if considered for retirement benefits) + Commission. But if you don’t live in a rented property, then you cannot claim benefit of this exemption and the entire amount would be taxable.
You can claim both deduction for interest of your house loan and exemption for HRA if you’re living in a rented accommodation and not in your own house. Even if you’re living in your parent’s house, you can claim HRA exemption by paying rent to your parents. In this case, your parents need to show rental income from you in their income tax return.
Always remember to check your HRA exemption while filing your return because many a times, it’s observed that companies do not give HRA exemption in Form 16 due to unavailability of complete details.