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.
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.