HRA Exemption Calculator
House Rent Allowance is partly tax-exempt under Section 10(13A). The exempt amount is the lowest of three statutory limits — this calculator applies all three and tells you which one bites.
HRA Details
Monthly figures — we'll annualise automatically.
₹50,000.00 per month
₹25,000.00 per month
₹20,000.00 per month
City Type
Metro: 50% of basic · Non-Metro: 40% of basic
HRA exemption is only available under the Old Tax Regime. Not applicable if you choose the New Regime.
How HRA Exemption is Calculated
The lowest of these three conditions is your tax-exempt HRA.
Actual HRA Received
HRA received from employer
₹3,00,000
per year
₹25,000 × 12
Rent minus 10% of Basic
Rent paid − 10% of Basic salary
₹1,80,000
per year
₹2,40,000 − ₹60,000 = ₹1,80,000
% of Basic Salary
50% of Basic (metro)
₹3,00,000
per year
50% × ₹6,00,000 = ₹3,00,000
Tip:If your annual rent exceeds ₹1,00,000, you must provide your landlord's PAN card to claim HRA exemption.
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HRA exemption calculator: For a salaried individual with a ₹40,000 monthly basic and ₹20,000 HRA, paying ₹22,000 rent in a metro city, the annual HRA exemption is ₹1.44 lakh. This reduces your taxable income under the Old Regime.
What Is HRA Exemption Calculator?
Paying rent in a metro city and not claiming HRA exemption is one of the most common and expensive tax mistakes salaried Indians make. Someone earning ₹80,000 a month and paying ₹20,000 rent in Mumbai can exempt up to ₹1.44 lakh from tax annually — tax saving of ₹14,400 to ₹43,200 depending on slab.
How HRA Exemption Calculator Is Calculated
HRA exemption is the lowest of the following three conditions:
1. Actual HRA received from the employer.
2. 50% of Basic Salary (if in a Metro city) or 40% (if Non-Metro).
3. Actual Rent paid minus 10% of Basic Salary.
Worked Example:
For an employee in Mumbai (Metro) with Basic: ₹40,000/mo, HRA: ₹20,000/mo, and Rent: ₹22,000/mo:
- Condition 1: ₹20,000
- Condition 2 (50% of 40k): ₹20,000
- Condition 3 (22k - 4k): ₹18,000
- Exempt Amount: ₹18,000/mo or ₹2,16,000/year.
- Taxable HRA: ₹2,000/mo or ₹24,000/year.
Key Factors That Affect Your Result
- City Classification: Only Delhi, Mumbai, Kolkata, and Chennai qualify as 'Metro' for the 50% rule. Bengaluru and Hyderabad are 40%.
- Basic Salary: Since two of the three rules depend on 'Basic + DA', a lower basic component in your CTC reduces your HRA tax benefit.
- Landlord PAN: Providing your landlord's PAN is mandatory if your annual rent exceeds ₹1,00,000.
HRA Exemption Calculator in the Indian Context
HRA exemption is governed by Section 10(13A) of the Income Tax Act. It is important to note that HRA exemption is not available under the New Tax Regime. Salaried employees must choose the Old Regime to claim this benefit.
If you pay rent to your parents, you can still claim HRA exemption, provided you have a formal rent agreement, pay via bank transfer, and your parents declare the rent as income in their ITR. You cannot pay rent to a spouse and claim HRA.
Practical Tip
Increasing your monthly rent payment by just ₹2,000 can often lead to a tax saving of ₹7,000+ per year if you are in the 30% tax bracket and currently below your HRA cap.
What most Indians miss: Most Indians don't know that you can pay rent to your parents and claim HRA, provided they own the property and you actually transfer the money to their account. They will have to show it as rental income, but if they are in a lower tax bracket, the family saves money overall.
Sources
- Income Tax Act, 1961 (Section 10(13A)) — [incometax.gov.in](https://incometax.gov.in)
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HRA FAQ
HRA Exemption — Common Questions
Under Section 10(13A), your HRA exemption is the lowest of three amounts: (1) Actual HRA received, (2) 50% of Basic Salary for metro cities or 40% for non-metros, and (3) Actual rent paid minus 10% of Basic Salary. For example, if your Basic is ₹50,000, HRA is ₹20,000, and you pay ₹15,000 rent in a non-metro: condition 3 is the lowest (₹15,000 - ₹5,000 = ₹10,000). Thus, ₹10,000 is tax-free and the remaining ₹10,000 is taxable.
No. HRA exemption is not available if you choose the New Tax Regime for FY 2026-27. Under the New Regime, your entire House Rent Allowance is fully taxable. You must opt for the Old Tax Regime when filing your ITR or declaring investments to HR in order to claim the HRA tax benefit.
Yes, if your annual rent payment exceeds ₹1,00,000 (which breaks down to roughly ₹8,333 per month), you are legally required to submit your landlord's PAN to your employer. If the landlord does not have a PAN, they must provide a signed declaration to that effect.
Yes, you can pay rent to your parents and claim HRA exemption, provided the property is legally owned by them (not you or a spouse). You must have a formal rent agreement, transfer the money via bank channels (not cash), and your parents must declare this rental income when filing their own Income Tax Returns.
For the purpose of HRA calculation, the Income Tax Act recognizes only four cities as 'Metros' where the 50% Basic Salary limit applies: Delhi, Mumbai, Kolkata, and Chennai. Even if you live in a major Tier-1 IT hub like Bengaluru, Pune, Hyderabad, or Gurugram, they are classified as 'Non-Metro', meaning the limit is restricted to 40% of your Basic Salary.
You can claim both HRA exemption (for the rent you pay in your current city of residence) and Home Loan Interest deduction (under Section 24b) for a property you own in another city. However, you must be able to prove that you cannot reside in your owned home due to employment reasons.
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