HRA exemption calculator
Enter monthly figures. Salary for this rule means basic pay plus dearness allowance (DA) forming part of retirement benefits.
How HRA exemption is worked out
HRA exemption is governed by Section 10(13A) of the Income-tax Act and Rule 2A. The exempt amount is theleast of three figures:
- Actual HRA received for the period.
- Rent paid minus 10% of salary.
- 50% of salary if the accommodation is in Delhi, Mumbai, Kolkata or Chennai; otherwise 40% of salary.
"Salary" here means basic pay plus dearness allowance (if it forms part of retirement benefits) plus any commission on turnover. Any HRA above the exempt amount is fully taxable as part of your salary. This exemption is available only under the old tax regime.
Sources: Income-tax Act, 1961 — Section 10(13A); Income-tax Rules, 1962 — Rule 2A. Verify against your Form 16, your salary structure and current rules before filing. This tool is an estimate.
Worked example
Basic Rs 30,000, HRA Rs 12,000, rent Rs 15,000, metro city. Least of the three: actual HRA = Rs 12,000; rent minus 10% of salary = Rs 15,000 - Rs 3,000 = Rs 12,000; 50% of salary = Rs 15,000. The exempt amount is the least, Rs 12,000 per month, or Rs 1,44,000 for the year. The remaining HRA of Rs 0 is taxable.
Frequently asked questions
How is HRA exemption calculated?
The exemption is the least of three amounts: (1) the actual HRA you receive, (2) rent paid minus 10% of salary, and (3) 50% of salary in metro cities (Delhi, Mumbai, Kolkata, Chennai) or 40% elsewhere. Salary here means basic pay plus dearness allowance forming part of retirement benefits.
Which cities count as metro for HRA?
Only Delhi, Mumbai, Kolkata and Chennai are treated as metro for the 50% limit. Every other city uses the 40% limit, regardless of its size.
Is HRA exemption available under the new tax regime?
No. HRA exemption under Section 10(13A) is available only under the old tax regime. Under the new regime, most of these exemptions are not available, so this calculator is relevant when you opt for the old regime.
Can I claim HRA if I live in my own house?
No. If you live in your own house, you cannot claim HRA exemption, because no rent is actually paid. The exemption requires genuine rent paid to a landlord.
Getting HRA right at filing time
HRA is one of the few exemptions that depends on documents, not just numbers. Keep your rent receipts and, where rent is high, the landlord's PAN. If you pay rent to a family member, the arrangement should be genuine and the rent should actually be paid. Remember that HRA relief is only available under the old tax regime, so run both regimes in the calculator before you choose. The exemption is the least of three amounts, so a low rent or a small HRA usually caps it. Check the figure your employer uses on the Form 16 against your own working, and keep the papers for the assessment year.
HRA exemption: the rules in plain words
Salary for this exemption means basic pay, dearness allowance that counts towards retirement benefits, and any commission on turnover. It does not include most other allowances. The three amounts are compared as they are: the rent you actually pay less ten percent of that salary figure, the allowance your employer gives you, and half or two-fifths of salary depending on the city. Whichever is smallest is the amount you can leave out of your taxable income. If you share a house and split the rent, only your own share counts. If rent crosses one lakh rupees in a year, the landlord's PAN is normally needed. Keep rent receipts, a rent agreement and proof of payment. Employers usually ask for these at the start of the year when you declare your investments. Check the figure on your Form 16 against your own working. If you changed jobs during the year, add both employers' figures. Remember this relief sits inside the old regime, so the comparison between the two regimes is the real decision.
Keeping your rent papers ready
Exemption claims live or die on paperwork. Save every rent receipt. Save the rent agreement. Save proof that money actually moved, such as bank entries. If the yearly rent crosses one lakh rupees, collect the landlord's PAN. If you pay a parent or a relative, keep the arrangement clean and the payments real. Employers usually collect these papers early in the year, when you declare your plans. Keep a personal copy too. People change jobs and lose access to old records. At filing time, you will want the same numbers you declared. Compare them with the Form 16 your employer issues. If they differ, ask why. Small gaps are common. Large gaps are worth fixing before you file.
About this tool
Written and maintained by the AccoNova editorial and payroll team, and last reviewed on (first published ). This is a free public calculator and an estimate, not a payslip, a tax return or professional advice. Figures depend on your salary structure, exemptions, state rules and current statutes — verify before relying on a result. AccoNova publishes product guidance and educational resources; no independent qualified statutory reviewer is claimed.
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