HRA, LTA, and Standard Deduction

Regime rules and specific figures can be fact-specific. This article is for general information and does not constitute tax advice.

House Rent Allowance

HRA exemption under old Section 10(13A) is the lowest of three figures: actual HRA received; rent paid minus 10% of salary (Basic plus DA); or 50% of salary for a metro city (Delhi, Mumbai, Kolkata, Chennai), 40% elsewhere. Rent receipts and the landlord’s PAN (where annual rent exceeds ₹1,00,000) are typically required to support the claim. This exemption is available only under the old tax regime; under the new regime, HRA received is fully taxable regardless of actual rent paid. Paying rent to a parent is permitted and can genuinely reduce tax, provided the arrangement is real and the parent reports the rental income.

Leave Travel Allowance

LTA exemption under old Section 10(5) covers actual travel cost for the employee and family, limited to economy air fare, first-class AC rail fare, or the equivalent for the shortest route, and specifically excludes local conveyance, sightseeing, hotel stays, and food. It can be claimed for two journeys in a block of four calendar years (the current block being 2022–2025), and one unused claim can be carried over to the first year of the next block. Like HRA, LTA is only exempt under the old regime; under the new regime it’s fully taxable.

Standard Deduction

A flat deduction against salary income, requiring no bills, receipts, or proof of expenditure at all. Under the old regime it stands at ₹50,000. Under the new regime it has been raised to ₹75,000, one of the few enhancements the new regime carries specifically to make it more competitive against the old one. It applies automatically to salary income and is separate from, and unaffected by, HRA or LTA claims.

Where these sit against the wider salary picture

HRA and LTA are two of the larger allowance exemptions, but they sit within a wider set of salary allowances, most of which are also old-regime only. The full picture, including the smaller allowances and the point that nearly all of them disappear under the new regime, is in Allowances. The non-cash side of a salary package, company car, accommodation, and similar, is valued differently again and covered in Perquisites.