HRA Exemption Calculator

HRA Exemption Calculator: understand how much of your rent is tax-free

House Rent Allowance (HRA) is one of the most common salary components in India, and also one of the most misunderstood at tax time. If you are a salaried employee who lives in rented accommodation and receives HRA as part of your CTC, a portion of that allowance is exempt from income tax under Section 10(13A) of the Income Tax Act. This calculator works out exactly how much of your HRA is tax-free and how much remains taxable, so you can plan your rent, salary structure and declarations with confidence.

This tool is built for salaried individuals in the private and public sector who pay rent and want a quick, accurate answer without wading through the Act. It is especially useful when you are comparing job offers, deciding how to structure your salary, or filling in investment and rent declarations for your employer's payroll team.

The exact formula

Your HRA exemption is the least of the following three amounts:

• The actual HRA received from your employer during the year.
• The rent you actually paid, minus 10% of salary (where salary means Basic pay plus Dearness Allowance that forms part of retirement benefits, plus any commission at a fixed percentage of turnover).
• 50% of salary if your rented home is in a metro city (Delhi, Mumbai, Kolkata or Chennai), or 40% of salary if it is anywhere else.

Whichever of these three is smallest is your exempt HRA. Anything you receive above that figure is added to your taxable salary. Note that "salary" here never means your full CTC or gross pay.

A fully worked example

Suppose Priya works in Delhi (a metro city) and her annual figures are as follows:

• Basic salary: Rs. 4,80,000 (Rs. 40,000 per month), with no DA.
• HRA received: Rs. 2,16,000 (Rs. 18,000 per month).
• Rent paid: Rs. 2,40,000 (Rs. 20,000 per month).

Now we calculate the three amounts:

• Actual HRA received = Rs. 2,16,000.
• Rent paid minus 10% of salary = Rs. 2,40,000 minus Rs. 48,000 = Rs. 1,92,000.
• 50% of salary (metro) = 50% of Rs. 4,80,000 = Rs. 2,40,000.

The least of Rs. 2,16,000, Rs. 1,92,000 and Rs. 2,40,000 is Rs. 1,92,000. So Priya's exempt HRA is Rs. 1,92,000, and the balance of Rs. 2,16,000 minus Rs. 1,92,000 = Rs. 24,000 is taxable and added to her income. Had she lived in a non-metro city, the third amount would have been 40% of salary = Rs. 1,92,000, which would not change the answer here because the rent-based figure is already the lowest.

Eligibility, rules and edge cases

• You must be a salaried employee who actually receives HRA and actually pays rent. If either is missing, no exemption applies.
• The exemption is available only under the old tax regime. As of FY 2025-26, the new tax regime does not allow the HRA exemption, so factor this in when choosing your regime.
• Only four cities count as metro for HRA: Delhi, Mumbai, Kolkata and Chennai. Fast-growing cities like Bengaluru, Hyderabad, Pune and Gurugram are treated as non-metro and use the 40% figure.
• The calculation should ideally be done month by month if your rent, salary or city changed during the year, then totalled, because the exemption is computed for the period the conditions are met.
• If your annual rent exceeds Rs. 1,00,000, you must report your landlord's PAN to your employer to claim the exemption.
• You can pay rent to a parent or family member and still claim HRA, provided the arrangement is genuine, money actually changes hands, and the recipient declares the rent as income.
• Self-employed people and salaried employees who do not receive HRA cannot use Section 10(13A), but may claim a deduction for rent under Section 80GG instead, subject to separate limits.

Tax treatment

The exempt portion never enters your taxable income, so it directly reduces the salary on which slab tax is charged. The taxable balance is taxed at your applicable slab rate. Because the benefit only exists in the old regime, employees with high rent often find the old regime more attractive once HRA and other deductions are added up. You can also claim HRA and a home loan interest deduction in the same year if, for example, you rent in one city for work while owning a house elsewhere, or the owned house is genuinely let out or still under construction.

Common mistakes and tips

• Using gross salary instead of Basic + DA. HRA is calculated on Basic (plus eligible DA and commission), not your full CTC.
• Forgetting the metro/non-metro distinction, or wrongly treating Bengaluru or Pune as metro cities.
• Not keeping rent receipts and the rent agreement. Retain these along with proof of payment; the tax department can ask for them.
• Missing the landlord PAN when rent crosses Rs. 1 lakh a year, which leads to the claim being denied.
• Claiming HRA under the new regime, where it simply is not available.
• Tip: pay rent by bank transfer rather than cash so there is a clear audit trail, especially when paying family members.