Salaried employees paying rent for a PG or hostel can claim House Rent Allowance (HRA) exemption under the Old Tax Regime. Learn the rules, calculation formula, and required receipts.
Yes. A common question among young salaried professionals in India is whether HRA tax exemption applies to paying guest (PG) rooms and hostels.
Under Section 10(13A) and Rule 2A of the Income Tax Act, 1961, any genuine rent paid by an employee for residential accommodation qualifies for HRA tax exemption, provided you actually incur the rental expenditure and do not own a home in the city where you are employed.
Keep in mind that HRA exemption is only applicable if you choose the Old Tax Regime.
Under the default New Tax Regime (Section 115BAC), common salary deductions and exemptions—including HRA—are not available. If you plan to claim HRA to reduce your taxable income, ensure your tax declaration with your employer selects the Old Tax Regime.
Under income tax rules, the tax-exempt portion of your HRA is the lowest of the following three figures: 1. Actual HRA received from your employer in your salary package. 2. 50% of Basic Salary + Dearness Allowance (DA) if you reside in metro cities (Delhi, Mumbai, Kolkata, Chennai), or 40% of Basic Salary + DA for non-metro cities. 3. Actual Rent Paid minus 10% of Basic Salary + DA.
PGZoo acts solely as a discovery and management technology platform for shared accommodations.
PGZoo does not collect, verify, mandate, or store PAN or GST details from PG owners, and property owners handle their own tax reporting independently. If your employer requires the landlord's PAN for HRA compliance above ₹1,00,000 annually, you should request the PAN directly from your PG owner or landlord.
When property owners manage bookings and payments through the PGZoo management system, digital rent receipts stating the date, amount, room details, and property name can be generated and shared with tenants. These receipts make it easy to maintain an organized, verifiable payment trail for your personal accounts and tax submissions.
