Housing.com - Which cities are considered metro cities for HRA calculation?
The tax deduction offered is different for metro and non-metro cities.
House rent allowance (HRA) is an integral part of most people’s salary. This salary component is not entirely taxable as salaried individuals are allowed the lowest of the following amounts as tax deductions under Rule 2A of Income Tax Rules (ITR) 1962:
The actual HRA
50% of your basic salary plus dearness allowance (DA), if they live in a metro city; 40% for non-metros
Actual rent paid minus 10% of your basic salary plus DA
This means that those living in non-metro cities can only claim 40% of their basic salary as tax-exempt HRA. In comparison, those living in metro cities can claim 50% of their basic salary as tax-exempt HRA.
