HRA Exemption Calculator
Work out your house rent allowance exemption under section 10(13A) and Rule 2A — the least of your actual HRA, rent paid minus 10% of salary, and 50% (metro) or 40% (non-metro) of salary. See exactly which amount is binding, and how much HRA stays taxable.
How the HRA exemption works
House rent allowance is one of the most valuable salary components for people who rent, because a large part of it can be exempt from tax under the old regime. The catch is that the exemption is not simply the HRA your employer pays — it is the least of three separately computed amounts, so two people with the same HRA can get very different exemptions depending on their rent, salary and city. Enter your figures on a monthly or annual basis and the calculator converts, computes all three amounts, and tells you which one is capping your exemption.
The three amounts are: the actual HRA received; the rent you pay minus 10% of your salary (so if your rent is low relative to salary, this shrinks fast); and 50% of salary in a metro or 40% elsewhere. Salary for this purpose is basic plus dearness allowance (the part counting toward retirement benefits) plus commission as a fixed percentage of turnover. The smallest of the three is exempt; anything above it is added to your taxable salary.
A worked example
Suppose your basic plus DA is ₹50,000 a month, you receive ₹20,000 a month as HRA, and you pay ₹18,000 a month in rent in Mumbai (a metro). The three amounts are: actual HRA ₹20,000; rent minus 10% of salary = ₹18,000 − ₹5,000 = ₹13,000; and 50% of salary = ₹25,000. The least is ₹13,000 a month, so ₹13,000 is exempt and the remaining ₹7,000 of HRA is taxable — ₹1,56,000 exempt and ₹84,000 taxable over the year. Move to a non-metro city and the third amount drops to 40% of salary (₹20,000), but the binding amount here is still the rent-minus-10% figure, so the exemption does not change in this particular case. Change the rent and it will — which is the point of testing it.
Why this only helps under the old regime
The HRA exemption is disallowed under the new tax regime. That makes it one of the key swing factors in the old-versus-new decision: a tenant in a metro with a high rent and a high HRA can have a five- or six-figure annual exemption that the new regime simply does not give. Before you lock in a regime for the year, compute your HRA exemption here, then plug it into the income tax calculator to see whether it tips the balance to the old regime.
This is an estimate for general guidance, not tax advice. It covers the section 10(13A) HRA exemption only, not section 80GG. Confirm with a chartered accountant before you file.
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Frequently asked questions
- How is the HRA exemption calculated?
- Under section 10(13A) and Rule 2A, the exemption is the least of three amounts: (1) the actual HRA you receive from your employer; (2) rent you actually pay minus 10% of your salary; and (3) 50% of salary if you live in a metro city, or 40% if you live anywhere else. Whichever of the three is smallest is the exempt amount; the rest of your HRA is taxable. This calculator computes all three and highlights the binding one.
- Which cities count as "metro" for HRA?
- Only four cities are metros under Rule 2A for HRA purposes: Delhi, Mumbai, Kolkata and Chennai. Residents of those four get the 50% of salary limit; everyone else — including people in Bengaluru, Hyderabad, Pune and Ahmedabad — uses the 40% limit. This is a common and expensive mistake, because the city definition for HRA is narrower than people assume.
- What does "salary" mean in the HRA formula?
- For HRA, salary means basic salary plus dearness allowance (only the part that forms part of retirement benefits) plus any commission calculated as a fixed percentage of turnover. It does not include other allowances, bonuses or perquisites. Because 10% of salary is subtracted from rent in the second amount, and the third amount is a percentage of salary, getting this base right matters.
- Can I claim HRA exemption under the new tax regime?
- No. The HRA exemption under section 10(13A) is available under the old regime only. The new regime does not allow it. If you have a large HRA exemption, that is one of the main reasons the old regime can still beat the new regime — compare both in the income tax calculator before you choose.
- What if I pay rent but my employer does not give me HRA?
- Then section 10(13A) does not apply, but you may be able to claim a deduction under section 80GG instead (subject to its own conditions and a ₹5,000-per-month cap). This calculator covers the section 10(13A) HRA case only. Talk to a chartered accountant about 80GG if it applies to you.
- Do I need my landlord's PAN?
- If the rent you pay exceeds ₹1,00,000 in a financial year, you must report your landlord's PAN to your employer to claim the HRA exemption. Keep rent receipts and, ideally, proof of payment through a bank channel in case the claim is examined.