How HRA exemption is calculated
If you receive House Rent Allowance and pay rent, part of that HRA is exempt from tax under Section 10(13A). The exempt amount is the least of three figures, and this calculator works out all three for you and picks the smallest.
The three amounts
- Actual HRA received from your employer.
- Rent paid minus 10% of salary (basic + DA).
- 50% of salary if you live in a metro (Delhi, Mumbai, Kolkata, Chennai), or 40% elsewhere.
HRA exemption is available only under the old tax regime. If you are on the new regime, HRA is fully taxable, so factor that into your regime choice using the
regime calculator.
A worked example
Suppose your basic salary plus DA is ₹6,00,000, you receive ₹3,00,000 HRA, pay ₹2,40,000 rent, and live in a metro. The three amounts are: actual HRA ₹3,00,000; rent minus 10% of salary is ₹2,40,000 − ₹60,000 = ₹1,80,000; and 50% of salary is ₹3,00,000. The least is ₹1,80,000, so that much of your HRA is tax-free and the remaining ₹1,20,000 is taxable.
What counts as salary for HRA
For this calculation, salary means basic pay plus dearness allowance (if it forms part of retirement benefits), and any commission based on a fixed percentage of turnover. It does not include other allowances or perquisites. Getting this base right matters, because it drives two of the three amounts.
Documents you need to claim HRA
To claim the exemption you generally need rent receipts, and if annual rent exceeds ₹1,00,000, your landlord's PAN. If you pay rent to a family member the arrangement must be genuine, with actual payments and, ideally, a rent agreement. For help structuring salary and claiming exemptions correctly, our income tax team can assist.
Frequently asked
How is HRA exemption calculated?
It is the least of three amounts: the actual HRA received, the rent you paid minus 10% of your salary (basic plus DA), and 50% of salary for metro cities or 40% for non-metros. Whichever of these three is smallest is the tax-free portion of your HRA; the balance is taxable. This calculator computes all three and shows you the result.
Which cities count as metro for HRA?
For HRA purposes, the metros are Delhi, Mumbai, Kolkata and Chennai, where 50% of salary is used in the calculation. Everywhere else counts as non-metro, where 40% is used. This distinction only affects the third of the three amounts, so it matters most when that amount is the smallest.
Can I claim HRA under the new tax regime?
No. HRA exemption under Section 10(13A) is available only under the old tax regime. Under the new regime your HRA is fully taxable. If you receive significant HRA, this can be a reason to compare both regimes carefully before choosing, since losing the HRA exemption may outweigh the new regime's lower rates.
Can I claim HRA if I pay rent to my parents?
Yes, provided the arrangement is genuine, you actually pay the rent, your parents own the property, and ideally there is a rent agreement and receipts. Your parents must also declare the rent as income in their return. Artificial arrangements purely to claim HRA can be challenged, so keep the payments and documentation real.
Do I need my landlord's PAN?
If your annual rent exceeds ₹1,00,000, you need to report your landlord's PAN to claim the exemption. Below that threshold, rent receipts are generally sufficient. Keeping proper receipts throughout the year makes the claim straightforward at filing time.