HRA Calculator

How HRA Exemption Works

House Rent Allowance (HRA) is a component of salary paid to employees to meet rental expenses. Under Section 10(13A) of the Income Tax Act, a portion of HRA is exempt from tax — but it's not the full amount. The exemption is calculated using a three-rule formula, and the lowest value wins.

The Three Rules of HRA Exemption

Your tax-exempt HRA is the minimum of these three amounts:

1. Actual HRA received — what your employer pays you as HRA
2. 50% of basic salary (metro) or 40% of basic salary (non-metro) — salary includes Basic + DA
3. Rent paid minus 10% of salary — the excess rent beyond 10% of your basic + DA

The third rule is usually the limiting factor for most employees, especially those with relatively low rent or high basic salary.

Metro vs Non-Metro

Only four cities qualify for the 50% rule: Delhi, Mumbai, Chennai, and Kolkata. If you live in any other city — including IT hubs like Bangalore, Hyderabad, and Pune — the non-metro 40% rule applies. This is one of the most common mistakes in HRA calculation.

HRA for Old vs New Tax Regime

Under the new tax regime (default from FY 2023-24), HRA exemption is not available. Your entire HRA is taxable. This makes the regime choice critical for employees paying significant rent — especially in metro cities with high rental costs.

If your HRA exemption under the old regime saves more tax than the lower slab rates of the new regime, the old regime may be better for you. Use this calculator to quantify the exemption before deciding.

Documents Needed for HRA Claim

• Rent receipts — mandatory for rent above ₹1 lakh/year
• Landlord's PAN — required if annual rent exceeds ₹1 lakh
• Rent agreement — recommended to have as supporting proof
• Bank transfer proof — if paying to parents or for large amounts

How to Use This HRA Calculator

1. Enter your monthly Basic Salary and DA from your pay slip
2. Enter the monthly HRA component from your salary
3. Enter the actual rent you pay per month
4. Select whether you live in a metro city (Delhi/Mumbai/Chennai/Kolkata)
5. The calculator shows your annual exemption, taxable amount, and which rule limits your exemption