HRA Calculator FY 2025-26 — Metro vs Non-Metro
Calculate your tax exemption on HRA under Section 10(13A)
✨ Updated for FY 2025-26 (Budget 2025)
HRA Exemption Calculator: An HRA exemption calculator determines the tax-exempt portion of House Rent Allowance under Section 10(13A) as the minimum of: actual HRA received, rent paid minus 10% of Basic+DA, or 50%/40% of Basic+DA for metro/non-metro cities. HRA exemption is available only under the old tax regime — not the new regime.
Reviewed by
CA Arjun Mehta
CA (ICAI) · B.Com (Hons) · 9+ years · Income Tax, GST & Investment Planning
Last reviewed: June 2026 · HRA Tax Exemption
🏙️ HRA Exemption Rates — Metro vs Non-Metro
Section 10(13A) · Old Tax Regime only · Not available in new regime
50%
of Basic Salary + DA
Metro City Limit (Condition 3)
🏙️ Metro Cities (4 only):
⚠️ Bangalore, Hyderabad, Pune, Ahmedabad are NOT metro — they use 40% rule
40%
of Basic Salary + DA
Non-Metro City Limit (Condition 3)
🏘️ Non-Metro Cities (all others) include:
📐 HRA Exemption = Minimum of these 3 conditions:
CONDITION 1
Actual HRA received
from your employer
CONDITION 2
Rent paid − 10% Basic
actual rent minus 10% of (Basic+DA)
CONDITION 3
50% / 40% of Basic
50% metro · 40% non-metro
💡 What Rent Do You Need for Full HRA Exemption?
Assumes HRA = 40% basic (non-metro) or 50% basic (metro). Rule: Min rent = HRA received + 10% basic. Paying less means Condition 2 limits your claim.
| Monthly Basic | Non-Metro HRA (40%) | Min Rent — Non-Metro | Metro HRA (50%) | Min Rent — Metro |
|---|---|---|---|---|
| ₹20,000 | ₹8,000 | ₹10,000 | ₹10,000 | ₹12,000 |
| ₹30,000 | ₹12,000 | ₹15,000 | ₹15,000 | ₹18,000 |
| ₹40,000 | ₹16,000 | ₹20,000 | ₹20,000 | ₹24,000 |
| ₹50,000 | ₹20,000 | ₹25,000 | ₹25,000 | ₹30,000 |
| ₹75,000 | ₹30,000 | ₹37,500 | ₹37,500 | ₹45,000 |
| ₹1,00,000 | ₹40,000 | ₹50,000 | ₹50,000 | ₹60,000 |
| ₹1,50,000 | ₹60,000 | ₹75,000 | ₹75,000 | ₹90,000 |
Rent > ₹1 lakh/year (₹8,333/month): landlord PAN mandatory. Rent to parents allowed — must be genuine market rate with rent agreement + transfer proof.
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.
🔗 Related Tax & Salary Calculators
💡 5 Expert Tips
Professional advice to get the most from HRA (House Rent Allowance) Calculator
Compare Both Regimes Every April Before Informing HR
The new tax regime is default from FY 2023-24. But if you have home loan, HRA, and LIC premium, old regime may save more. Always use an income tax calculator to compare BEFORE you inform your employer at the start of each financial year in April.
Max Out NPS Beyond 80C for Extra ₹50,000 Deduction
Section 80CCD(1B) allows ₹50,000 additional NPS deduction over and above the ₹1.5L 80C limit. At 30% bracket, this saves ₹15,450/year extra. Open NPS on the NSDL portal and invest ₹4,167/month to claim the full deduction every year.
Harvest ₹1.25 Lakh LTCG Tax-Free Each Year
Long-term capital gains up to ₹1.25 lakh per year from equity/mutual funds are completely tax-free. Systematically sell and rebuy mutual fund units each March to "harvest" up to ₹1.25L in gains tax-free annually. This can save ₹15,000+/year over your investing life.
Claim HRA Even If Parents Own the House
If you pay rent to your parents (where they own the house), you can legitimately claim HRA exemption. Your parents must declare this as rental income (taxable in their hands, but often in lower bracket). Family tax planning through legitimate rent can save ₹30,000–₹80,000/year.
Use Form 12BB Correctly — Declare All Savings in April
Submit Form 12BB to your employer at the start of the financial year declaring all planned 80C, 80D, HRA, and home loan investments. If you under-declare, HR deducts higher TDS. If over-declared, you get a refund later but lose liquidity. Calculate accurately upfront.
❓ Frequently Asked Questions
Everything you need to know about HRA (House Rent Allowance) Calculator
Q1. Which tax regime is better — Old or New for FY 2025-26?
New regime is better if your total deductions (80C + 80D + HRA + home loan interest) are less than ₹3.75 lakh. Old regime wins if deductions exceed ₹3.75 lakh. For most salaried employees under ₹12L income, the new regime gives zero tax due to ₹12L threshold (₹12.75L with standard deduction). Always calculate both.
Q2. Is income up to ₹12 lakh truly tax-free in FY 2025-26?
Under the new regime, the ₹12L threshold works via Section 87A tax rebate — it applies to normal income (salary, rent, FD interest). Special rate income (capital gains on shares, lottery winnings) is NOT eligible for the rebate. So LTCG from equity can attract tax even if total income is under ₹12L.
Q3. What is the 30% tax bracket and who does it apply to?
The 30% income tax slab applies to income above ₹15 lakh in the new regime (above ₹10L in old regime). With 4% Health & Education Cess, effective rate becomes 31.2%. For income above ₹50 lakh, additional 10-25% surcharge applies, pushing effective rates to 34-42.7%.
Q4. How does Section 80C work and what qualifies?
Section 80C provides deduction up to ₹1.5 lakh per year for specific investments: EPF/VPF, ELSS, PPF, NSC, tax-saving FD (5-year), LIC premium, home loan principal repayment, SSY, NPS (within 80C), and tuition fees for 2 children. Available in old regime only.
Q5. What is TDS and how to check if correct TDS is being deducted?
TDS (Tax Deducted at Source) is advance tax deducted by your employer/bank. Check Form 26AS on the Income Tax portal (incometax.gov.in) to see total TDS deposited against your PAN. If employer deducts excess TDS, you get a refund when filing ITR. Under-deduction means you pay the balance while filing.
Q6. Can I claim home loan deduction in the new tax regime?
Section 24(b) home loan interest deduction (up to ₹2L for self-occupied property) is NOT available in the new regime. However, for let-out (rented) properties, actual interest paid can be claimed against rental income even in the new regime. If you have a large home loan, old regime is likely better.
Q7. What is advance tax and who needs to pay it?
If your total tax liability exceeds ₹10,000 in a year (after TDS), you must pay advance tax in installments: 15% by June 15, 45% by Sept 15, 75% by Dec 15, and 100% by March 15. Freelancers, consultants, and those with income from multiple sources typically need to pay advance tax.
Q8. How is HRA exemption calculated?
HRA exemption is the MINIMUM of: (1) Actual HRA received, (2) 50% of basic salary for metro cities (40% for non-metro), (3) Actual rent paid minus 10% of basic salary. If you pay rent to parents, you can claim HRA — parents must declare it as rental income in their ITR.
Q9. What is LTCG and STCG tax on mutual funds and shares?
LTCG (holding >1 year) on equity and equity MF: 12.5% on gains above ₹1.25L/year (as of Budget 2024-25). STCG (holding ≤1 year) on equity: 20%. For debt mutual funds (held any period): taxed at your income tax slab rate (as per 2023 amendment). No indexation benefit for any category now.
Q10. What deductions are available for senior citizens?
Senior citizens (60-79 years): higher basic exemption ₹3L (old regime), 80TTB deduction up to ₹50,000 on FD/RD interest, 80D health insurance ₹50,000. Super seniors (80+): basic exemption ₹5L, no advance tax obligation, can file ITR-1 even for capital gains from equity up to ₹5L.
Q11. How to file ITR correctly if you switched jobs mid-year?
Collect Form 16 from both employers. Combine income from both. Clubbing income often means TDS was calculated on each job separately without knowing full-year income — resulting in underpayment that you must pay while filing ITR. Use Form 26AS to verify total TDS deducted. File ITR-1 (if only salary) by July 31.
Q12. What happens if I miss the ITR filing deadline?
Last date for ITR without penalty: July 31 (salaried). Belated return (Aug 1 to Dec 31) attracts ₹1,000-5,000 penalty under Section 234F. Interest under 234A (1%/month) applies on unpaid tax. Not filing also carries risk of notice, scrutiny assessment, and losses (equity LTCG exemption cannot be carried forward).
Calculator Disclaimer
For Informational Purposes Only: The HRA (House Rent Allowance) Calculator provides estimates based on the inputs you enter and standard financial formulas. Results are indicative only and do not constitute financial advice.
Not a Guarantee: Actual returns, tax liability, or financial outcomes may differ due to market conditions, regulatory changes, or individual circumstances not captured in the calculator.
Professional Advice: For significant financial decisions, please consult a SEBI-registered Investment Advisor, Chartered Accountant, or certified financial planner.
Data Currency: All rates, slabs, and parameters are updated periodically. Verify current rates from official sources (RBI, SEBI, Income Tax Department, IRDAI) before making decisions.
Last Updated: 17 Jun 2026 | Data Source: RBI, SEBI, Income Tax Act 1961, IRDAI | Maintained by CalcWise.Finance