HRA Calculator – House Rent Allowance
Calculate your tax exemption on HRA under Section 10(13A)
✨ Updated for FY 2025-26 (Budget 2025)
HRA exemption available in old tax regime.
⚡ Try Quick Scenarios
Exempted HRA Amount
₹ 2,40,000
📊 Exemption Calculation (Minimum of 3 Conditions):
Taxable HRA Amount
₹ 0
This amount will be added to your taxable income
📊 HRA Breakdown
💼 Real HRA Exemption Examples for Indians
See how HRA exemption works in different scenarios (FY 2025-26)
👨💻 Example 1: IT Professional in Bangalore (Non-Metro)
Salary Details:
- • Basic Salary: ₹6,00,000/year
- • HRA Received: ₹2,40,000/year (40% of basic)
- • Rent Paid: ₹25,000/month = ₹3,00,000/year
- • City: Bangalore (Non-Metro)
- • DA: Nil
HRA Exemption Calculation:
1. Actual HRA: ₹2,40,000
2. Rent – 10% Basic: ₹3,00,000 – ₹60,000 = ₹2,40,000
3. 40% of Basic (Non-Metro): ₹2,40,000
Minimum = ₹2,40,000
✅ Full HRA exempted! Zero taxable HRA
Tax Saved: ₹2,40,000 × 30% = ₹72,000
👔 Example 2: Manager in Mumbai (Metro City)
Salary Details:
- • Basic Salary: ₹10,00,000/year
- • HRA Received: ₹5,00,000/year (50% of basic)
- • Rent Paid: ₹40,000/month = ₹4,80,000/year
- • City: Mumbai (Metro)
- • DA: Nil
HRA Exemption Calculation:
1. Actual HRA: ₹5,00,000
2. Rent – 10% Basic: ₹4,80,000 – ₹1,00,000 = ₹3,80,000
3. 50% of Basic (Metro): ₹5,00,000
Minimum = ₹3,80,000
Taxable HRA: ₹5,00,000 – ₹3,80,000 = ₹1,20,000
Tax Saved: ₹3,80,000 × 30% = ₹1,14,000
🏛️ Example 3: Government Employee with DA (Delhi)
Salary Details:
- • Basic Salary: ₹8,00,000/year
- • Dearness Allowance: ₹2,00,000/year (25% of basic)
- • HRA Received: ₹4,00,000/year
- • Rent Paid: ₹30,000/month = ₹3,60,000/year
- • City: Delhi (Metro)
HRA Exemption Calculation:
Basic + DA: ₹8,00,000 + ₹2,00,000 = ₹10,00,000
1. Actual HRA: ₹4,00,000
2. Rent – 10% (Basic+DA): ₹3,60,000 – ₹1,00,000 = ₹2,60,000
3. 50% of (Basic+DA): ₹5,00,000
Minimum = ₹2,60,000
Taxable HRA: ₹4,00,000 – ₹2,60,000 = ₹1,40,000
Tax Saved: ₹2,60,000 × 30% = ₹78,000
🏠 Example 4: Living with Family (Low Rent Scenario)
Scenario:
- • Basic Salary: ₹5,00,000/year
- • HRA Received: ₹2,00,000/year
- • Rent Paid to Parents: ₹3,000/month = ₹36,000/year
- • City: Pune (Non-Metro)
- • Note: Paying nominal rent to parents
HRA Exemption Calculation:
1. Actual HRA: ₹2,00,000
2. Rent – 10% Basic: ₹36,000 – ₹50,000 = ₹0 (Negative!)
3. 40% of Basic: ₹2,00,000
Minimum = ₹0
⚠️ No HRA exemption! Full ₹2,00,000 is taxable
Reason: Rent paid is less than 10% of basic salary (₹50,000)
💡 To claim exemption, rent must exceed 10% of basic salary
🔧 How HRA Exemption Works – Detailed Guide
What is HRA?
House Rent Allowance (HRA) is a component of your salary package designed to help you meet your rental expenses. A significant portion of this allowance can be claimed as tax-free under Section 10(13A) of the Income Tax Act, 1961, reducing your taxable income and overall tax liability.
The 3-Condition Rule
Your HRA exemption is calculated as the lowest (minimum) of the following three conditions:
Actual HRA Received
The total HRA amount your employer pays you annually
Formula: Total Annual HRA from Salary Slip
Rent Paid Minus 10% of Basic Salary
Actual rent you pay, reduced by 10% of your basic salary + DA
Formula: Annual Rent – (10% × (Basic Salary + DA))
⚠️ If rent is less than 10% of basic, this becomes zero or negative
Percentage of Basic Salary Based on City
50% for metro cities, 40% for non-metro cities
Metro Cities: 50% × (Basic + DA)
Non-Metro Cities: 40% × (Basic + DA)
📍 Metro: Delhi, Mumbai, Chennai, Kolkata
Step-by-Step Calculation Process
Step 1: Calculate your Basic Salary + Dearness Allowance (if any)
Step 2: Note down the total annual HRA received from your employer
Step 3: Calculate total annual rent paid (Monthly Rent × 12)
Step 4: Calculate 10% of (Basic + DA) and subtract from rent paid
Step 5: Calculate 50% (metro) or 40% (non-metro) of (Basic + DA)
Step 6: Compare all three values and pick the minimum
Step 7: Subtract exemption from HRA received to get taxable HRA
Important Points to Remember
- HRA exemption is only available in the old tax regime
- You must be living in a rented accommodation to claim exemption
- If annual rent exceeds ₹1 lakh, landlord’s PAN is mandatory
- Keep rent receipts and rental agreement as proof
- You cannot claim HRA for rent paid to spouse
- Rent to parents/siblings is allowed with proper documentation
- Even if you own a house elsewhere, you can claim HRA if living in rented accommodation
- Dearness Allowance (DA) is included in calculations only if it forms part of retirement benefits
Old vs New Tax Regime Impact
| Aspect | Old Tax Regime | New Tax Regime |
|---|---|---|
| HRA Exemption | ✅ Available | ❌ Not Available |
| Calculation Method | Minimum of 3 conditions | Full HRA taxable |
| Documentation Required | Rent receipts, PAN (if >₹1L) | No exemption, no docs needed |
| Tax Impact | Reduces taxable income | No reduction |
❓ Comprehensive FAQ on HRA Exemption
What is HRA exemption?
HRA exemption allows salaried employees to reduce their taxable income by claiming a portion of their House Rent Allowance as tax-free under Section 10(13A) of the Income Tax Act. It’s calculated as the lowest of actual HRA received, rent paid minus 10% of basic salary (plus DA), and 50%/40% of basic salary for metro/non-metro cities.
Who is eligible for HRA exemption?
Salaried individuals who receive HRA as part of their salary package and pay rent for accommodation are eligible. You must be living in a rented house (not your own property). Exemption is only available in the old tax regime. Self-employed individuals cannot claim HRA but can claim under Section 80GG if they don’t receive HRA.
What are the metro cities for HRA calculation?
Metro cities for 50% exemption calculation are: Delhi, Mumbai, Kolkata, and Chennai. All other cities in India are classified as non-metro and qualify for 40% exemption. This classification is as per Income Tax rules and hasn’t changed in FY 2025-26.
How does the new tax regime affect HRA exemption?
In the new tax regime (default from FY 2023-24 onward), HRA exemption is not available. The full HRA amount received is added to your taxable income. You should opt for the old regime if your total deductions (including HRA, 80C, 80D, home loan interest) significantly reduce your tax liability compared to the new regime’s lower slab rates.
What documents are required to claim HRA exemption?
Essential Documents:
- Rent receipts for all months (signed by landlord)
- Rental agreement/lease deed
- Landlord’s PAN card (mandatory if annual rent exceeds ₹1 lakh)
- Cancelled cheque or bank statement showing rent payment
- Landlord’s Aadhaar (recommended for verification)
Note: For rent up to ₹1 lakh annually, landlord’s PAN is not mandatory, but receipts are still required.
Can I claim HRA if I own a house?
Yes, you can claim HRA exemption even if you own a house, provided:
- You live in a different city from where you own the house (e.g., own house in hometown, work in metro city)
- Your owned house is not in the same city where you’re paying rent
- Your owned house is unoccupied or rented out
You can simultaneously claim home loan interest deduction (Section 24) on your owned house and HRA exemption on your rented accommodation.
Can I pay rent to my parents or relatives and claim HRA?
Parents/Siblings: Yes, you can pay rent to parents or siblings and claim HRA exemption. You need proper rental agreement, rent receipts, and proof of payment (bank transfer). Your parents must declare this rental income in their ITR.
Spouse: No, you cannot claim HRA for rent paid to your spouse as per Income Tax rules.
Tip: If parents are in lower tax bracket or have no taxable income, this is tax-efficient for the family.
What is Dearness Allowance (DA) and how does it affect HRA?
Dearness Allowance is an allowance paid to government employees to offset the impact of inflation. For HRA calculation purposes, DA is added to basic salary only if it forms part of retirement benefits. Private sector employees typically don’t receive DA. If your DA doesn’t form part of retirement benefits, don’t include it in HRA calculation.
What if my rent is less than 10% of my basic salary?
If annual rent paid is less than 10% of your (Basic Salary + DA), the second condition (Rent – 10% Basic) becomes zero or negative. In this case, it will be the minimum of the three conditions, resulting in zero HRA exemption. Your entire HRA becomes taxable. This commonly happens when living with family and paying nominal rent.
Example: Basic ₹5L, Rent ₹3K/month = ₹36K/year. 10% of ₹5L = ₹50K. Since ₹36K < ₹50K, no exemption.
How is HRA different from Section 80GG?
HRA (Section 10(13A)): For salaried individuals who receive HRA as part of salary
Section 80GG: For individuals who pay rent but do NOT receive HRA (self-employed, salaried without HRA component)
You can claim only one of them, not both. Section 80GG has a maximum deduction limit of ₹5,000 per month (₹60,000 per year) subject to certain conditions.
Do I need to submit proof to my employer or while filing ITR?
To Employer: Submit rent receipts, rental agreement, and landlord’s PAN (if applicable) at the start of financial year or when claiming exemption. Employer will adjust TDS accordingly.
While Filing ITR: You don’t need to attach documents with online ITR, but must keep them for 6 years for potential scrutiny by Income Tax Department. Declare HRA exemption in ITR form under “Income from Salary”.
Can I claim HRA for multiple months if I changed houses?
Yes, you can claim HRA for different rental properties in the same financial year. Calculate exemption separately for each period based on respective rents and locations (metro/non-metro). Submit rent receipts and agreements for all properties to your employer.
What happens if I don’t have rent receipts?
Without rent receipts, you cannot claim HRA exemption. The full HRA will be taxable. Rent receipts are mandatory documentation. If your landlord refuses to provide receipts or PAN (for rent >₹1L/year), they’re likely trying to evade taxes. You can report this to tax authorities, but you’ll lose the exemption for that period.
Solution: Always insist on proper documentation in your rental agreement. Use rent receipt books available at stationery stores or generate receipts online.