HRA Calculator — House Rent Allowance tax exemption
Calculate your HRA tax exemption under Section 10(13A). Inputs: basic salary, HRA received, rent paid, and city type.
Inputs
Result
About the HRA Calculator
HRA (House Rent Allowance) is the single biggest tax-saving component for renting salaried employees in India. For someone earning ₹15 lakh/year and paying ₹25,000/month rent in a metro, HRA exemption alone can shelter ₹2.4–3 lakh of income, saving ₹50,000–₹90,000 in tax depending on slab. This makes HRA optimization more impactful than most other 80C-style deductions for renters.
The exemption formula is a 'minimum of three' rule — actual HRA received, 50% of basic+DA for metros (40% for non-metros), or rent paid minus 10% of basic+DA. Whichever is lowest becomes your tax-free amount. The remaining HRA gets taxed as regular salary. Most salaried employees don't realize that under-quoting rent or paying too little rent caps the exemption — there's a sweet spot where actual rent paid is high enough to maximize claim.
Requirements for claiming HRA: rent receipts for claims above ₹3,000/month, PAN of landlord if annual rent exceeds ₹1 lakh (₹8,333/month), valid rent agreement (preferred but not strictly mandatory by law for HRA — yet your employer or assessing officer may ask), and the rule that you cannot own residential property in the same city where you claim HRA. You can own property in another city while claiming HRA in your work-city — this is fully legal.
What counts as a 'metro' for HRA — and what doesn't — surprises people. Income Tax law lists only Delhi, Mumbai, Kolkata, and Chennai as metros. Bengaluru, Hyderabad, Pune, Ahmedabad, Gurgaon, Noida — all major cities with metro-level rents — are technically non-metro for HRA purposes, capped at 40% instead of 50%. Pushback against this rule has been raised in Parliament for years; no change so far. Plan accordingly.
HRA is unavailable in the new tax regime. If your HRA claim is significant (₹1.5L+), you may save more under the old regime even after losing the simpler new-regime rates. Run both regimes through this calculator and the income tax calculator before locking your declaration. Special case for those paying rent to parents: legal and common, but rent receipts must be issued, parents must declare the rental income on their ITR, and the arrangement must be at fair market rates. Done correctly, this is a perfectly legitimate way to convert taxable salary into family wealth-building.