The HRA full form stands for House Rent Allowance. It is mostly exempted from this House Rent Allowance tax only for those living in a rented house. These are part of your salary paid by the employer to cover the rent expenses for accommodation. This HRA deduction is deducted from the annual income of a salaried and self-employed person while filing an ITR. It is the amount of tax credit that can be claimed, which enables an individual to reduce his annual income and save some tax. This is the amount the employees pay for the place they live in. These include maintenance and basic rent etc. This fee does not have electricity, water, and other utilities.It relates to the city or town where the employees have settled their residence. Different cities are classified into different categories with different HRA exemption limits.