Answer

1. F

   Facts

   HRA exemption is the least of three amounts: actual HRA received, rent paid minus 10% of salary, and 50% of salary in Delhi, Mumbai, Kolkata or Chennai or 40% elsewhere. Salary here means basic plus dearness allowance that counts for retirement.

2. P

   Provisions and law

   • Sec 10(13A), Income-tax Act 1961 (now Sec 11 (Schedule III, Table Sl. No. 11))HRA exemption is the least of actual HRA received, rent paid minus 10% of salary, and 50% of salary in Delhi, Mumbai, Kolkata or Chennai or 40% elsewhere.
   • Rule 2A, Income-tax Rules 1962 (now Rule 279, Income-tax Rules 2026)Sets the HRA exemption limits and city percentages.
3. A

   Analysis

   In Delhi with basic ₹6,00,000 a year, HRA received ₹2,40,000 and rent ₹2,70,000: rent minus 10% of basic is ₹2,10,000, and 50% of basic is ₹3,00,000. The least is ₹2,10,000, which is exempt; ₹30,000 of HRA is taxable. HRA exemption applies only in the old regime.

4. C

   Conclusion

   1. 1Note annual basic plus qualifying DA.
   2. 2Note HRA received and rent paid.
   3. 3Compute the three limits.
   4. 4Take the least as exempt.
   5. 5Claim it only under the old regime.

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