HRA Exemption Calculator
Optimize your tax savings by calculating the exact amount of House Rent Allowance (HRA) exempt from tax under Section 10(13A).
HRA Exemption
₹2,50,000
Minimum of these 3 is exempted from tax.
HRA exemption is only applicable if you are choosing the Old Tax Regime.
Metro cities include Mumbai, Delhi, Kolkata, and Chennai. All other cities fall under the 40% rule.
The HRA Exemption Rules
To claim HRA, you must be a salaried employee receiving HRA as part of your salary structure and must stay in a rented house. You cannot claim HRA if you live in your own house.
Metro Rule
50% of Basic salary for Mumbai, Delhi, Kolkata, Chennai. 40% for others.
Old Regime
HRA exemption is one of the biggest reasons to choose the Old Tax Regime.
Rent Receipts
Ensure you have rent receipts and PAN of landlord for high rent amounts.
How HRA Exemption is Calculated
The Income Tax Department exempts the minimum of the following three amounts:
- Actual HRA: The total HRA amount received from your employer.
- The 40/50 Rule: 50% of your basic salary if you live in a metro city, or 40% if you live in a non-metro city.
- Rent Paid Rule: Actual rent paid minus 10% of your basic salary.
The Three Conditions for HRA Exemption
HRA exemption under Section 10(13A) is calculated as the minimum of three amounts. This protects the government from paying exemption beyond the actual rent expenditure or the standard percentage.
Condition 1
Actual HRA received from your employer during the year.
Condition 2
50% of Basic+DA (Metro) or 40% of Basic+DA (Non-Metro).
Condition 3
Actual rent paid minus 10% of Basic+DA.
Metro vs Non-Metro Cities for HRA
The Income Tax Act classifies only four cities as 'Metro' for HRA purposes, entitling residents to a 50% exemption ceiling: Delhi, Mumbai (including Navi Mumbai & Thane), Kolkata, and Chennai. All other cities — including Bangalore, Hyderabad, Pune, and Ahmedabad — are classified as Non-Metro, where the ceiling is 40% of Basic+DA.
HRA vs Standard Deduction: New vs Old Regime
- Under the Old Regime: You can claim HRA exemption + home loan interest + 80C deductions. Better if you pay high rent.
- Under the New Regime: You get a flat ₹75,000 Standard Deduction but NO HRA exemption. Better if you don't pay rent or pay low rent.
- Use our Income Tax Calculator to compare both regimes with your actual HRA numbers.
Frequently Asked Questions
What is HRA Exemption?
HRA Exemption is a tax benefit available to salaried individuals who live in rented accommodation. It allows you to reduce your taxable income by the amount of rent paid, subject to certain limits.
Can I claim HRA in the New Tax Regime?
No, HRA exemption is only available under the Old Tax Regime. The New Tax Regime (default from 2024-25) does not allow most deductions, including HRA.
Which cities are considered 'Metro' for HRA?
For HRA calculation, only Mumbai, Delhi, Kolkata, and Chennai are considered metro cities (50% of basic salary). All other cities like Bangalore, Hyderabad, and Pune are considered non-metro (40%).
What if I pay rent to my parents?
You can claim HRA exemption by paying rent to your parents, provided you have a valid rent agreement and the rent is actually transferred to their account. Your parents must declare this as rental income in their tax returns.
What documents are needed to claim HRA?
You generally need rent receipts and a rent agreement. If the annual rent exceeds ₹1,00,000, providing the PAN of the landlord is mandatory.
What is the formula for calculating HRA exemption?
HRA exemption is the LEAST of three amounts: (1) Actual HRA received from employer, (2) 50% of Basic+DA if living in a metro city (Delhi, Mumbai, Chennai, Kolkata) or 40% if in a non-metro city, (3) Actual rent paid minus 10% of Basic+DA.
Is HRA available under the New Tax Regime?
No. HRA exemption is only available under the Old Tax Regime. If you opt for the New Tax Regime (lower slab rates with fewer deductions), you cannot claim HRA exemption. However, you may still claim a Standard Deduction of ₹75,000.
What documents are required to claim HRA?
You need rent receipts from your landlord, a rental agreement, and the landlord's PAN if annual rent exceeds ₹1 lakh. Your employer may also ask for Form 12BB filled with these details.
Can I claim both HRA and home loan interest?
Yes, if you live in a rented house in one city and have a home loan for a property in another city (or if your own home is genuinely occupied by family), you can claim both HRA exemption and home loan interest deduction under Section 24(b).
What if I pay rent to parents?
You can claim HRA by paying rent to your parents, provided the arrangement is genuine (rent is actually transferred, parent shows it as rental income). The HRA exemption rules apply normally in this case.