How is salary TDS adjusted for HRA exemption?

Question

tdsguru.in (CA firm) · Accepted Answer

Under the old regime the employer allows the least of the three HRA limits as exempt and deducts TDS only on the balance; rent proof is needed, and the landlord's PAN if annual rent exceeds ₹1 lakh. For an old-regime employee receiving HRA, the exempt amount is the least of: actual HRA received; rent paid minus 10% of salary; and 50% of salary (metro) or 40% (non-metro). The employer reduces taxable salary by this exemption before computing TDS. The employee must declare rent in Form 12BB and provide rent receipts; if annual rent exceeds ₹1,00,000, the landlord's PAN is required. HRA exemption is not available under the new regime.