If you’re a salaried employee living in rented accommodation, House Rent Allowance (HRA) is one of the easiest ways to lower your taxable income — but only if you calculate the exemption correctly. Most people either claim their full HRA as tax-free (which is usually wrong) or skip the claim entirely because the rule feels confusing. Our HRA calculator does the math for you instantly: enter your basic salary, HRA received, and monthly rent, and it shows exactly how much of your HRA is exempt and how much is taxable.
HRA Calculator
Calculate your House Rent Allowance (HRA) exemption and taxable HRA in seconds.
Under the old tax regime, the exempt HRA is generally the lowest of:
- Actual HRA received from your employer
- Rent paid minus 10% of eligible salary
- 50% of eligible salary for Delhi, Mumbai, Kolkata or Chennai; otherwise 40%
What Is HRA (House Rent Allowance)?
HRA is a component of your salary that employers pay to help cover your rental accommodation costs. It appears on your salary slip alongside basic pay, and unlike basic salary, a part of it can be claimed as tax-exempt under Section 10(13A) of the Income Tax Act, provided you actually live in a rented house and pay rent for it.
HRA exemption is only available if:
- You receive HRA as part of your salary structure
- You live in rented accommodation
- You are filing taxes under the old tax regime (HRA exemption is not available under the new regime)
HRA Exemption Formula — How It’s Calculated
The tax-exempt portion of your HRA is the lowest of the following three amounts, calculated on a monthly or annual basis:
- Actual HRA received from your employer
- Rent paid minus 10% of salary (Basic + Dearness Allowance, if applicable)
- 50% of salary if you live in a metro city (Delhi, Mumbai, Kolkata, Chennai), or 40% of salary for a non-metro city
Whichever of these three numbers is smallest becomes your exempt HRA. The remaining amount gets added back to your taxable salary and taxed at your income slab rate.
Formula summary:
Exempt HRA = MIN(
HRA received,
Rent paid − 10% of (Basic + DA),
50% or 40% of (Basic + DA)
)HRA Calculation Example
Here’s how the formula plays out in practice.
Example 1: Metro city employee
- Basic + DA: ₹40,000/month
- HRA received: ₹18,000/month
- Rent paid: ₹20,000/month
- City: Metro (50%)
| Condition | Amount |
|---|---|
| HRA received | ₹18,000 |
| Rent − 10% of salary (₹20,000 − ₹4,000) | ₹16,000 |
| 50% of salary | ₹20,000 |
The lowest value is ₹16,000, so ₹16,000/month is exempt, and the remaining ₹2,000/month is added to taxable income.
Example 2: Non-metro city employee
- Basic + DA: ₹35,000/month
- HRA received: ₹14,000/month
- Rent paid: ₹12,000/month
- City: Non-metro (40%)
| Condition | Amount |
|---|---|
| HRA received | ₹14,000 |
| Rent − 10% of salary (₹12,000 − ₹3,500) | ₹8,500 |
| 40% of salary | ₹14,000 |
Here the lowest value is ₹8,500, so only ₹8,500/month is exempt, even though HRA received was ₹14,000.
These examples show why a flat assumption (“my whole HRA is tax-free”) is often wrong — rent paid and city classification matter just as much as the HRA amount itself.
How to Use This HRA Calculator
- Enter your monthly basic salary + DA
- Enter the HRA you receive each month (check your salary slip)
- Enter the actual rent you pay
- Select whether you live in a metro or non-metro city
- The calculator instantly shows your exempt HRA and taxable HRA, along with which of the three rules is limiting your exemption
What If You Don’t Get HRA in Your Salary?
If your salary structure doesn’t include an HRA component but you still pay rent, you can claim a deduction under Section 80GG instead. This is common for self-employed individuals or employees whose CTC doesn’t break out HRA separately. The deduction is capped at the lowest of: ₹5,000/month, 25% of total income, or rent paid minus 10% of income.
Documents Required to Claim HRA Exemption
- Rent receipts for each month you’re claiming, signed by the landlord
- Rental agreement as supporting proof
- Landlord’s PAN card details — mandatory if total annual rent exceeds ₹1,00,000
- Proof of rent payment (bank transfer/UPI records are safer than cash)
Explore More Tools: CTC Calculator | Salary Tax Calculator | PF Calculator
Frequently Asked Questions
No. HRA exemption under Section 10(13A) is only available if you opt for the old tax regime. The new regime does not allow this deduction.
Yes, if you live in a rented house in one city while owning and paying EMI on a home loan for a property in a different city, you can claim both — provided you meet the conditions for each independently.
It’s calculated on Basic + Dearness Allowance (DA) only, not your full gross salary. Other components like special allowance or bonus are excluded.
Only Delhi, Mumbai, Kolkata, and Chennai are classified as metro cities for HRA exemption, qualifying for the 50% rule. All other cities, including Bengaluru, Pune, and Hyderabad, fall under the 40% non-metro rule.
Your employer typically asks for rent receipts once a year (usually in Jan-Mar) to process your Form 16, but you should retain proof of rent paid throughout the year in case of an income tax scrutiny.
Yes, provided your parents own the property, you have a valid rental agreement, you actually transfer rent to them, and they declare it as rental income in their own tax return.
Then your exempt HRA will be very low or zero, since the “rent minus 10% of salary” condition becomes the limiting factor. In this case, most of your HRA becomes taxable.
