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Calculate exactly how much of your House Rent Allowance is tax-free and how much is taxable. Uses the official three-rule formula under Section 10(13A). Metro and non-metro supported. FY 2025-26.
This tool computes your exact numbers. For a full conceptual guide on HRA rules, rent-to-parents scenarios, and Form 16 impact, read our HRA Exemption Guide →
Quick Answer
HRA exemption = minimum of: (1) actual HRA received, (2) rent paid minus 10% of basic salary, (3) 50% of salary in metro cities or 40% in non-metro. The lowest of these three is exempt from income tax. HRA exemption is only available under the Old Tax Regime.
HRA Exemption Calculator
Monthly basic salary (not CTC)
Usually ₹0 for private-sector employees
HRA component shown on your pay slip
Rent you actually pay to your landlord
City Type
Calculations follow Section 10(13A) of the Income Tax Act, 1961. For old tax regime only. Results are estimates — verify with a qualified CA before filing ITR.
HRA Exemption Result
Exempt HRA
₹2,40,000
per year · 100% of HRA
Taxable HRA
₹0
per year · 0% of HRA
Rule-by-Rule Breakdown
Exempt HRA = minimum of the three amounts below
Actual HRA received
HRA as per pay slip
₹2,40,000
Rent paid minus 10% of salary
₹3,00,000 − 10% × ₹6,00,000
₹2,40,000
50% of salary (metro)
50% × ₹6,00,000
₹3,00,000
Annualised Figures Used
HRA exemption is only available under the Old Tax Regime. If you have opted for the New Regime, your entire HRA of ₹2,40,000 is taxable. Compare regimes →
Educational Purpose — Please Read
This calculator is for informational and educational purposes only. Results are estimates based on standard HRA rules under Section 10(13A) for FY 2025-26. Tax rules can change with Finance Acts and CBDT circulars. Always verify your final exemption with a qualified Chartered Accountant before filing your ITR. For complex situations involving multiple employers, arrears, or disputed rent claims, consult a tax professional.
House Rent Allowance — HRA — is a component in the salary structure of most salaried employees in India. Your employer pays it as part of your Cost to Company (CTC) to help cover the cost of rented accommodation. What makes HRA genuinely useful from a tax perspective is that a portion of it — sometimes all of it — is exempt from income tax, directly reducing your taxable salary.
The exemption is governed by Section 10(13A) of the Income Tax Act, 1961, read with Rule 2A of the Income Tax Rules. Unlike many tax deductions that require you to invest money upfront, HRA exemption simply requires you to be paying rent — something you are already doing. That makes it one of the most accessible tax benefits for salaried employees.
However, the exemption is not a fixed amount and it is not equal to your entire HRA. It is determined by a three-rule formula, and the final exempt amount is always the minimum of three calculated figures. Most employees assume all their HRA is tax-free — that is often not the case, especially in non-metro cities or where rent is relatively low compared to salary.
The exempt HRA is the lowest of these three amounts. All three are calculated on an annual basis.
Actual HRA received from employer
= Annual HRA received
The HRA component in your CTC, annualised.
Rent paid minus 10% of salary
= Annual rent paid − (10% × annual basic salary + DA)
If this is negative (rent < 10% of salary), it becomes zero — meaning no exemption at all.
City-based percentage of salary
= 50% of salary (metro) or 40% of salary (non-metro)
Metro cities: Mumbai, Delhi, Kolkata, Chennai only.
Exempt HRA = Minimum(Rule 1, Rule 2, Rule 3)
Taxable HRA = HRA Received − Exempt HRA
The city classification affects only Rule 3 — the percentage of salary used as the ceiling. Metro cities get a higher ceiling of 50%, non-metro cities get 40%. This difference exists because housing costs in the four designated metro cities are significantly higher.
| City type | Rule 3 ceiling | Cities included |
|---|---|---|
| Metro | 50% of basic + DA | Mumbai, Delhi, Kolkata, Chennai |
| Non-Metro | 40% of basic + DA | Bengaluru, Hyderabad, Pune, Ahmedabad, and all other cities |
Important: The city classification is determined by your place of residence, not your office location. If you work in Bengaluru but live in Chennai, you use metro rates.
Example 1 — Metro (Mumbai)
Basic: ₹50,000/mo · HRA received: ₹20,000/mo · Rent paid: ₹25,000/mo
Rules 1 and 2 both equal ₹2,40,000, which is lower than Rule 3 (₹3,00,000). Full HRA is exempt — zero taxable HRA.
Example 2 — Non-Metro (Pune)
Basic: ₹40,000/mo · HRA received: ₹15,000/mo · Rent paid: ₹12,000/mo
Rule 2 is the limiting factor — rent paid (₹1,44,000) minus 10% of salary (₹48,000) = ₹96,000. Even though the full HRA of ₹1,80,000 was received, only ₹96,000 is exempt. ₹84,000 remains taxable.
Edge Case — Rent below 10% of salary
Basic: ₹60,000/mo · HRA: ₹20,000/mo · Rent paid: ₹5,000/mo
10% of salary = ₹72,000/year. Annual rent = ₹60,000. Since ₹60,000 < ₹72,000, Rule 2 = ₹60,000 − ₹72,000 = −₹12,000 → rounded to ₹0. Exempt HRA = ₹0. The entire ₹2,40,000 annual HRA is taxable despite being paid. This is the most common surprise for employees who pay very low rent relative to their salary.
HRA exemption is exclusive to the old tax regime. Under the old regime, the exempt portion of HRA reduces your gross total income before tax is computed on the remaining amount. Combined with other deductions — 80C investments (up to ₹1.5 lakh), NPS 80CCD(1B) (up to ₹50,000), 80D health insurance, and home loan interest — HRA can be part of a deduction stack that meaningfully reduces taxable income.
At a salary of ₹10 LPA in a metro city with ₹16,000/month rent, HRA exemption alone can save ₹20,000–26,000 in annual tax at the 15–20% effective bracket. At ₹15 LPA, the same HRA setup saves ₹30,000–40,000. These are not trivial amounts — they are often the deciding factor in whether old or new regime is better for a particular employee.
The new tax regime, introduced in Budget 2020 and made default from FY 2023-24, operates on a trade-off: lower tax rates in exchange for removing most exemptions and deductions. HRA exemption under Section 10(13A) is one of the exemptions that was removed. Under the new regime, your HRA is simply treated as part of your salary and taxed at the applicable slab rate.
This is why the regime decision matters so much for employees paying high rent. An employee in Mumbai paying ₹30,000/month rent with a ₹15 LPA salary could see their taxable income increase by ₹2+ lakh by switching to the new regime — translating to ₹40,000–50,000 more in tax. The new regime's lower slab rates may or may not compensate for this, depending on the full deduction stack.
The right approach is to calculate your tax under both regimes with all your actual numbers — including HRA exemption in the old regime — and choose the lower figure. Our Salary Calculator runs this comparison side-by-side.
Assuming all HRA is tax-free
Many employees see the HRA component in their pay slip and assume the entire amount is exempt. The actual exempt amount depends on all three rules. If your rent is low relative to salary, a significant portion — or all — of your HRA may be taxable.
Not submitting rent receipts to the employer
If you do not submit Form 12BB with rent receipts to your employer before January, your employer cannot account for HRA exemption in TDS deductions. You will have excess TDS deducted throughout the year and must claim it back when filing ITR — delaying your refund.
Using CTC instead of basic salary in the formula
The formula uses basic salary (plus DA if applicable) — not total CTC, not gross salary. Using CTC inflates the calculation and produces incorrect results. Always check your pay slip for the specific basic salary line item.
Claiming HRA in new regime
Some employees declare HRA to their employer and expect exemption even after opting for the new regime. This is not allowed. Under the new regime, HRA is fully taxable regardless of rent paid.
Not reporting rent received to the tax department
If you pay rent to a parent or relative and that person does not declare the rental income in their ITR, both parties face scrutiny risk. The rent arrangement must be genuine, documented, and properly reported on both sides.
Related Tools & Guides
HRA exemption is the portion of your House Rent Allowance that is not subject to income tax under Section 10(13A) of the Income Tax Act. It is calculated as the minimum of three amounts: (1) actual HRA received from employer, (2) rent paid minus 10% of basic salary plus DA, and (3) 50% of salary for metro cities or 40% for non-metro cities. The lowest of these three is your exempt HRA.
For HRA exemption, only four cities are classified as metro under the Income Tax Act: Mumbai, Delhi, Kolkata, and Chennai. Employees living in these four cities can claim 50% of basic salary as the city component. All other cities — including Bengaluru, Hyderabad, Pune, Ahmedabad, and others — are non-metro, where the limit is 40% of basic salary.
No. HRA exemption under Section 10(13A) is not available under the new tax regime introduced in Budget 2020. If you opt for the new regime, your entire HRA received from the employer is treated as taxable income. HRA exemption is only available when you file under the old tax regime with the applicable deductions and exemptions.
For the purpose of HRA exemption calculation, salary means basic salary plus Dearness Allowance (DA) that forms part of salary for retirement benefit computation. It does not include other components like HRA itself, special allowances, bonus, commission, or other perquisites. Most private-sector employees have zero DA, so salary for HRA = basic salary only.
Yes, but with important conditions. You can pay rent to your parents and claim HRA exemption, provided: (1) the rent is actually paid and is not just notional, (2) your parents declare this rental income in their own ITR, (3) there is a genuine tenancy agreement. You cannot claim rent paid to a spouse. Rent to parents is legitimate if properly documented and reported.
If your annual rent paid is less than or equal to 10% of your annual salary (basic + DA), then Rule 2 — rent paid minus 10% of salary — becomes zero or negative. This means your exempt HRA is zero and your entire HRA received is taxable. For example, if basic salary is ₹60,000/month (₹7.2 lakh/year) and rent is ₹5,000/month (₹60,000/year), 10% of salary = ₹72,000. Since rent (₹60,000) < 10% of salary (₹72,000), Rule 2 = ₹0, so no HRA exemption.
If your annual rent payment exceeds ₹1,00,000 (₹8,333/month), you must submit your landlord's PAN to your employer. For rent below ₹1,00,000 annually, PAN is not mandatory but rent receipts are still needed. You should submit Form 12BB to your employer with rent receipts showing landlord name, address, rent amount, and rent period. Without receipts, your employer cannot process the exemption in Form 16.
Common reasons for HRA discrepancies in Form 16: (1) you did not submit rent receipts to your employer by the January deadline, so no exemption was applied; (2) your employer applied the exemption based on your declaration but your actual rent differs; (3) you changed jobs and the old employer's HRA treatment was different. If HRA is shown fully taxable in Form 16 but you paid rent, you can still claim the correct exemption while filing your ITR — you are not bound by your employer's calculation.