HRA Exemption Calculator
Enter your monthly basic salary, HRA received, rent paid and city type to instantly see how much of your HRA is exempt from income tax under Section 10(13A) — and how much stays taxable.
What is HRA exemption?
House Rent Allowance (HRA) is a salary component your employer pays to help cover the cost of renting a home. If you actually live in rented accommodation, part — sometimes all — of that HRA is exempt from income tax under Section 10(13A) of the Income Tax Act, 1961. The catch: this exemption is available only under the old tax regime. Under the new regime HRA is fully taxable, so it is worth checking both options with our Income Tax Calculator before you decide.
The least-of-three formula
The exempt portion of your HRA is the lowest of these three amounts:
- Actual HRA received from your employer during the year.
- Rent paid minus 10% of salary, where salary means basic pay plus the dearness allowance (DA) that counts towards retirement benefits.
- 50% of salary if you live in a metro city, or 40% of salary for any other location.
The exemption is worked out on the actual months you paid rent and received HRA. If your rent, salary, HRA or city changed during the year, each period is calculated separately and the results are added up.
Worked example: metro vs non-metro
The city you live in changes the third limit — 50% of salary in a metro versus 40% elsewhere — so identical salary and rent can produce very different exemptions. The table below runs two employees through all three rules using monthly figures:
| Rule | Metro (Mumbai) | Non-metro (Indore) |
|---|---|---|
| Basic salary + DA | ₹50,000 | ₹40,000 |
| HRA received | ₹20,000 | ₹16,000 |
| Rent paid | ₹18,000 | ₹10,000 |
| 1. Actual HRA | ₹20,000 | ₹16,000 |
| 2. Rent − 10% of basic | ₹13,000 | ₹6,000 |
| 3. 50% / 40% of basic | ₹25,000 | ₹16,000 |
| Exempt (lowest) | ₹13,000 | ₹6,000 |
| Annual exemption | ₹1,56,000 | ₹72,000 |
Notice that in both cases the "rent minus 10% of basic" line is the binding limit. That is common: unless your rent is high relative to your salary, this second rule usually decides the exemption. It also explains why someone paying little or no rent gets nothing — if rent is below 10% of basic, that figure turns negative and the exempt amount is zero.
How much tax does the exemption actually save?
The exempt HRA is simply removed from your taxable income, so the rupee saving depends on your slab under the old regime. Take the Mumbai employee above with a ₹1,56,000 annual exemption. If their other income puts them in the 30% bracket, the saving is roughly ₹1,56,000 × 31.2% (30% tax plus 4% health-and-education cess) ≈ ₹48,700 a year. In the 20% band the same exemption saves around ₹32,400, and in the 5% band about ₹8,100. The higher your slab and your genuine rent, the more valuable claiming HRA in the old regime becomes.
Which cities count as metro?
For HRA, "metro" has a narrow, specific meaning. Only four cities qualify for the 50% limit:
- Delhi
- Mumbai
- Kolkata
- Chennai
Every other city — including Bengaluru, Hyderabad, Pune, Ahmedabad, Gurugram and Noida, however expensive their rents — is treated as non-metro and capped at 40% of salary. This is a frequent source of over-claims, so pick the correct city type in the calculator above.
No HRA in your salary? Claim under Section 80GG
If you pay rent but your salary has no HRA component — common for many consultants, pensioners and self-employed people — you can still claim a deduction under Section 80GG. The deduction is the least of:
- ₹5,000 per month (₹60,000 a year);
- 25% of your total income; and
- rent paid minus 10% of your total income.
To qualify, neither you nor your spouse or minor child may own a home in the city where you live and work, you must not be receiving HRA, and you need to file Form 10BA declaring the rent. Like HRA, Section 80GG applies only under the old regime.
Paying rent to parents or family
You may claim HRA on rent paid to your parents if the arrangement is genuine. Transfer the rent by bank so there is a clear trail, ideally sign a rent agreement, and remember that your parents must report this money as rental income in their own return — they can deduct 30% as a standard house-property deduction, which often keeps the tax low if they fall in a lower slab. Rent paid to a spouse is generally disallowed by tax tribunals, since spouses are expected to live together and the payment is treated as artificial.
Documents to keep
Your employer needs proof before allowing the exemption in your TDS, and the tax department can ask for it later. Keep:
- Monthly rent receipts and, ideally, a registered or signed rent agreement;
- Bank statements showing the rent transfers;
- Your landlord's PAN — mandatory if your annual rent exceeds ₹1,00,000 (about ₹8,334/month). If the landlord genuinely has no PAN, a signed declaration is needed instead.
HRA is only one part of your CTC. The same basic-plus-DA figure that decides your exemption also drives your provident fund and your gratuity, so any change to your salary structure ripples across all three.