HRA Exemption Calculator

Taxes

Find out exactly how much of your House Rent Allowance escapes tax, using the least-of-three rule that the Income Tax Act applies.

In short: The HRA Exemption Calculator is a free online tool that lets you work out how much of your House Rent Allowance is tax-exempt — instantly, with charts, a worked example and the exact formula.

Your inputs

Exempt HRA

₹1,80,000

Taxable HRA

₹1,20,000

Est. tax saved

₹54,000

Assuming a 30% tax slab

HRA composition

Exempt versus taxable portion of your HRA.

Least-of-three calculation

Least-of-three calculation
Rule	Amount
Actual HRA received	₹3,00,000
Rent paid − 10% of basic	₹1,80,000
50% of basic salary	₹3,00,000
Exempt (least of the three)	₹1,80,000

HRA exemption equals the smallest of the three statutory amounts.

Formula

Exempt HRA = min( HRA received, Rent − 10% of basic, 50%/40% of basic )

HRA received: Actual HRA in your salary
Rent − 10% basic: Rent paid minus 10% of basic salary
50%/40% basic: 50% of basic for metro cities, 40% otherwise

Step-by-step calculation

Worked with the default values.

1
Rule 1 — Actual HRA
HRA received
= ₹3,00,000
2
Rule 2 — Rent excess
₹2,40,000 − 10% × ₹6,00,000
= ₹1,80,000
3
Rule 3 — 50% of basic
0.5 × ₹6,00,000
= ₹3,00,000
4
Exempt HRA
min(Rule 1, Rule 2, Rule 3)
= ₹1,80,000

How it works

The exemption is the smallest of three figures, so no single rule can inflate it.
Metro cities (Delhi, Mumbai, Kolkata, Chennai) use 50% of basic; other cities use 40%.
Whatever HRA is not exempt is added to your taxable salary.

Examples

Basic ₹6L, HRA ₹3L, rent ₹2.4L in a metro

Rent minus 10% of basic (₹1.8L) is usually the least, so about ₹1.8L is exempt.

Understanding the HRA Exemption Calculator

What is House Rent Allowance?

House Rent Allowance (HRA) is a salary component paid to employees to help cover the cost of rented accommodation. It is one of the most valuable tax breaks for salaried Indians — but only under the Old tax regime, and only up to a limit set by the Income Tax Act. Any HRA above the exempt portion is added back to your taxable salary.

The least-of-three rule

The exempt HRA is the smallest of these three amounts, so no single figure can inflate your exemption:

Actual HRA received from your employer.
Rent paid minus 10% of basic salary (plus DA where it counts toward retirement benefits).
50% of basic if you live in a metro (Delhi, Mumbai, Kolkata, Chennai), or 40% in any other city.

Whichever of these is lowest becomes your exemption; the rest of the HRA is taxable. This calculator computes all three and shows the winning figure along with your estimated tax saved.

Metro vs non-metro, and what counts as basic

Only the four classic metros — Delhi, Mumbai, Kolkata and Chennai — qualify for the 50% limit; fast-growing cities like Bengaluru, Pune and Hyderabad are treated as non-metro at 40%. When applying the rules, "basic salary" usually means just your basic pay, unless your dearness allowance forms part of retirement benefits, in which case DA is added in.

Claiming it correctly

To claim HRA smoothly, keep the paperwork in order:

Retain rent receipts and a rent agreement.
Provide your landlord's PAN if annual rent exceeds ₹1 lakh.
If you pay rent to parents, ensure they own the home and declare the rental income.

If your salary has no HRA component, you can still claim rent under Section 80GG. And if you own a home in one city while renting in another for work, you may claim both HRA and the home-loan deductions. Since HRA is an Old-regime benefit, always weigh it against the New regime's lower slab rates before choosing.

Pros

Reduces taxable salary, directly lowering the income tax you pay under the Old regime.
Available to salaried employees living in rented accommodation with an HRA component.
Can be combined with a home-loan deduction in genuine cases across different cities.
Rewards higher rent and metro living with a larger exempt amount.
Section 80GG offers a fallback deduction even when no HRA is paid.

Cons

Not available under the New tax regime — HRA is fully taxable there.
Requires rent receipts and the landlord's PAN if annual rent exceeds ₹1 lakh.
The least-of-three rule often caps the exemption well below the HRA received.
Homeowners living in their own house cannot claim it.

Tips

1Keep dated rent receipts and a rent agreement to substantiate your claim.
2Collect your landlord's PAN if your annual rent crosses ₹1 lakh.
3If your rent is low relative to salary, restructuring the salary toward basic can raise the exemption.
4Paying rent to parents can be tax-efficient if they are in a lower slab and declare the income.
5Compare the HRA benefit under the Old regime against the New regime's lower rates before deciding.

Frequently asked questions

Everything you need to know about the HRA Exemption Calculator.

Which cities count as metro for HRA?

Only Delhi, Mumbai, Kolkata and Chennai qualify as metros for HRA, allowing 50% of basic. All other cities use the 40% limit.

Can I claim HRA under the New regime?

No. The HRA exemption is available only under the Old tax regime. Under the New regime HRA is fully taxable.

Do I need rent receipts?

Yes. To claim HRA you must keep rent receipts, and if annual rent exceeds ₹1 lakh you also need your landlord’s PAN.

Can I claim HRA if I pay rent to my parents?

Yes, provided the arrangement is genuine. Your parents must actually own the home, you should transfer rent to them and keep receipts, and they must declare that rental income in their own tax return. This can be tax-efficient if they fall in a lower slab.

What if my HRA is more than the exemption?

The exemption is capped at the least of the three statutory amounts. Any HRA you receive above that figure is fully taxable and added to your salary income. This calculator shows both the exempt and the taxable portions.

Can I claim both HRA and a home loan deduction?

Yes, in genuine cases. If you own a house in one city but live on rent in another for work, you can claim HRA on the rent and Section 24(b) interest plus 80C principal on the home loan simultaneously. The property must not be the one you are renting.

Is DA included in the basic salary for HRA?

Only if your dearness allowance forms part of retirement benefits (as it does for many government employees). In that case, add DA to basic when applying the 10% and 40%/50% rules. For most private-sector employees where DA is not part of the salary structure, only basic is used.

What if I do not receive HRA in my salary?

If your salary has no HRA component but you pay rent, you can claim a deduction under Section 80GG instead — the least of ₹5,000 a month, 25% of total income, or rent paid minus 10% of income. It too is available only under the Old regime.

How is HRA exemption calculated for a mid-year city change?

The exemption is worked out on a monthly basis, so if you move between a metro and a non-metro during the year, apply 50% of basic for the metro months and 40% for the rest. Sum the monthly exempt amounts to get the annual figure.

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HRA Exemption Calculator