HRA Exemption Calculator
TaxCalculate your HRA exemption under Section 10(13A) for FY 2025-26. See exactly how much HRA is tax-free based on your city tier, rent paid, and basic salary.
Your HRA Details
Monthly Basic Salary₹50,000
Monthly HRA Received₹20,000
Monthly Rent Paid₹22,000
City Tier
Metro: Delhi, Mumbai, Kolkata, Chennai
What is a HRA?
An HRA Exemption Calculator computes the tax-free portion of your House Rent Allowance under Section 10(13A) of the Income Tax Act. The exemption is the minimum of three legally defined components, and the HRA Calculator evaluates all three using your monthly basic salary, HRA received, rent paid, and city tier — instantly identifying which component limits your exemption and how much tax saving results.
HRA is one of the most valuable tax-saving tools available to salaried employees under the old tax regime. A Bengaluru software professional with a ₹20 lakh CTC paying ₹25,000/month in rent can save ₹40,000–₹60,000 in annual income tax purely through HRA exemption — a figure that makes the difference between the old and new tax regime worthwhile for many earners. Yet the three-component minimum formula is complex enough that most employees either claim too little or make errors in their ITR filing.
The formula has been in place since the Income Tax Act, 1961, and is governed by Rule 2A of the Income Tax Rules. The critical nuance is that all three components act as caps, and the exemption is limited to the smallest of the three — not the average. This means increasing your rent payment beyond a certain level provides no additional exemption if Component 3 (the percentage of basic) is the binding constraint.
India's RERA-era real estate market has increased the prevalence of formal rent agreements and landlord PAN requirements, making the documentation trail for HRA claims cleaner. Pair this calculator with the Income Tax Calculator for a complete view of your tax liability before deciding between the old and new regime.
How to use this HRA calculator
- Enter Monthly Basic Salary — the "Basic" component from your salary slip, not your CTC or gross salary. This is typically 40–50% of your gross salary in Indian pay structures.
- Enter Monthly HRA Received — the "HRA" line item on your salary slip. This is the amount your employer pays as HRA, not the rent you pay.
- Enter Monthly Rent Paid — the actual rent you pay each month to your landlord, as evidenced by your rent agreement and receipts.
- Select City Tier — choose Metro (Delhi, Mumbai, Kolkata, Chennai) for the 50% of basic limit, or Non-Metro for 40%.
- Read the three components — the highlighted component is the minimum and determines your exemption. The result card shows the annual exemption, taxable HRA, and tax saving at both 30% and 20% slabs.
Formula & Methodology
Section 10(13A) Formula: HRA Exemption = Minimum of: - Component 1: Annual HRA received from employer - Component 2: Annual rent paid − 10% of Annual Basic Salary - Component 3: 50% of Annual Basic (metro) OR 40% of Annual Basic (non-metro) Annual values = Monthly figures × 12. Tax Saving = HRA Exemption × Tax Slab Rate × 1.04 (including 4% health & education cess). Worked example: A software engineer in Bengaluru (non-metro) earns ₹60,000/month basic salary, receives ₹24,000/month HRA, and pays ₹25,000/month rent. Annual values: Basic = ₹7,20,000; HRA received = ₹2,88,000; Rent paid = ₹3,00,000. - Component 1 (HRA received) = ₹2,88,000 - Component 2 (Rent − 10% of Basic) = ₹3,00,000 − ₹72,000 = ₹2,28,000 - Component 3 (40% of Basic, non-metro) = 40% × ₹7,20,000 = ₹2,88,000 HRA Exemption = Minimum = ₹2,28,000 (Component 2 is the binding constraint) Taxable HRA = ₹2,88,000 − ₹2,28,000 = ₹60,000 Tax saving at 30% slab = ₹2,28,000 × 0.30 × 1.04 = ₹71,136 per year Note: If the same engineer moves to a 1 BHK at ₹22,000/month rent instead, Component 2 = ₹2,64,000 − ₹72,000 = ₹1,92,000, and the exemption drops to ₹1,92,000 — the rent level directly determines the exemption when Component 2 is the binding constraint.
Frequently Asked Questions
What is HRA exemption and how is it calculated?
HRA (House Rent Allowance) exemption under Section 10(13A) of the Income Tax Act is the portion of HRA received from your employer that is not subject to income tax. The exempt amount equals the minimum of three components: (1) actual HRA received from the employer; (2) actual rent paid minus 10% of basic salary; (3) 50% of basic salary for metro cities or 40% of basic for non-metro cities. The HRA Exemption Calculator computes all three components and identifies the minimum automatically.
Which cities are considered 'metro' for HRA exemption?
Only four cities qualify for the 50% of basic salary limit under the Income Tax Act: Delhi, Mumbai (including Mumbai Metropolitan Region), Kolkata, and Chennai. All other cities in India — including Bengaluru, Hyderabad, Pune, Ahmedabad, and tier-2 cities — are classified as non-metro, where the limit is 40% of basic salary. This distinction can significantly affect the exemption amount for salaried employees in Bengaluru or Hyderabad.
Can I claim HRA exemption if I live in a rented house but the rent receipt is in my parents' name?
You can claim HRA exemption for rent paid to your parents, provided you have a valid rent agreement with them and they declare the rent as income in their own ITR. The payment must be genuine and not a paper arrangement — bank transfers are recommended over cash payments. You cannot claim HRA for a house that you own yourself, even if you pay a mortgage on it.
What is the 10% of basic salary rule in HRA calculation?
Component 2 of the HRA exemption formula is: Rent Paid − 10% of Basic Salary. This means only rent above 10% of your basic salary qualifies for exemption. If your basic salary is ₹50,000/month (₹6 lakh/year) and you pay ₹18,000/month (₹2.16 lakh/year) in rent, only ₹2,16,000 − ₹60,000 = ₹1,56,000 counts as Component 2. This threshold ensures the exemption only applies to rent that is a meaningful cost relative to income.
What documents do I need to claim HRA exemption?
For rent below ₹1 lakh per year, rent receipts are typically sufficient. For rent above ₹1 lakh per year (₹8,334+/month), the landlord's PAN is mandatory under Section 206AA. You will also need a rent agreement and evidence of rent payments (bank statements or UPI receipts). Submit these to your employer's HR or finance team for TDS adjustment, or claim the exemption directly in your ITR under the old tax regime.
Is HRA exemption available under the new tax regime?
No — HRA exemption under Section 10(13A) is not available under the new tax regime introduced in the Union Budget 2020 and revised in 2023. The new regime offers lower tax rates but removes most exemptions including HRA, LTA, and Section 80C deductions. Salaried employees who pay high rent in metro cities often find the old tax regime more beneficial precisely because of the HRA exemption. Use the [Income Tax Calculator](/income-tax-calculator/) to compare both regimes with your actual HRA and rent numbers.
What if I pay rent to my spouse? Can I claim HRA exemption?
Paying rent to a spouse and claiming HRA exemption is generally not accepted by the Income Tax Department, as the transaction is considered a circular flow of money within the family. Courts and the tax department have consistently disallowed such claims. HRA can be claimed for rent paid to parents (with genuine documentation) but not to a spouse.
How is the HRA exemption different from the standard deduction?
The standard deduction (₹75,000 for FY 2025-26 under the new regime; ₹50,000 under the old regime) is a flat deduction available to all salaried employees regardless of whether they rent or own. HRA exemption is additional and available only to those who receive HRA as part of their salary package and pay rent. Both can be claimed together under the old tax regime.
What if my employer does not provide HRA as part of my salary?
If HRA is not part of your salary structure, you cannot claim the Section 10(13A) exemption. However, you may be able to claim a deduction under Section 80GG (up to ₹5,000/month or 25% of total income, whichever is less) if you are paying rent and do not own a house. Section 80GG is also available under the old regime only, and the income limit and deduction cap make it less valuable than the Section 10(13A) exemption.
My rent just crossed ₹50,000/month — does this change anything for HRA?
When monthly rent paid to a single landlord exceeds ₹50,000, the tenant is required to deduct TDS at 5% under Section 194-IB and deposit it with the government before claiming the deduction. This is a compliance requirement, not an additional tax on you — you deduct from the landlord's rent. Failure to deduct and deposit TDS can result in the rent payment being disallowed as a deduction and penalties being levied.
How does basic salary affect my HRA exemption?
Basic salary is the anchor for two of the three HRA components: Component 2 uses 10% of basic as the threshold, and Component 3 is 50%/40% of basic. A lower basic salary in a high-CTC structure (where basic is kept at 30–35% of CTC) reduces the HRA exemption on both axes. Employees negotiating salary structures should consider requesting a higher basic-to-CTC ratio if they live in rented accommodation in metro cities.