HRA Exemption Calculator

House Rent Allowance (HRA) is a common salary component provided by employers to cover living accommodations. Under Section 10(13A) of the Income-tax Act, read with Rule 2A of the Income-tax Rules, salaried employees living in rented accommodation can claim a statutory exemption on their HRA, significantly reducing taxable salary.

HRA exemption is available exclusively under the Old Tax Regime. Under the default New Tax Regime (Section 115BAC), HRA exemption is not available and all HRA received forms part of taxable salary.

The three-part statutory HRA formula

Under Section 10(13A), your tax-exempt HRA is calculated as the lowest of the following three amounts:

1. Actual HRA received from your employer during the financial year.
2. Rent paid in excess of 10% of salary: Actual annual rent paid minus 10% of Basic Salary + Dearness Allowance (DA).
3. City accommodation ceiling:
   • 50% of salary (Basic + DA) if living in a designated metro city (Delhi, Mumbai, Kolkata, or Chennai).
   • 40% of salary (Basic + DA) if living in any non-metro city (including Bengaluru, Hyderabad, Pune, Gurugram, and Ahmedabad).

Worked calculation example

Consider an employee working in a metro city with a monthly basic salary of ₹40,000, monthly HRA of ₹16,000, and actual monthly rent of ₹18,000.

In this example, ₹1,68,000 of the annual HRA is completely exempt from income tax, while the remaining ₹24,000 is added to taxable salary income under the old regime.

Documentary requirements & compliance rules

• Rent receipts and rental agreement: Keep valid rent receipts for each month along with an active lease agreement showing your name, landlord's name, property address, and rent amount.
• Landlord PAN declaration: Under CBDT circulars, if annual rent paid exceeds ₹1,00,000 (approximately ₹8,333 per month), you must provide your landlord's PAN to your employer. If the landlord does not possess a PAN, a signed Form 60 declaration is required.
• TDS on rent: Under Section 194-IB, if monthly rent exceeds ₹50,000, the tenant must deduct 2% TDS (formerly 5%) and deposit it with the government using Form 26QC.
• Paying rent to family: You can pay rent to parents if they are the registered owners of the property. The transaction must be documented via bank transfers, rent receipts, and the parents must declare the rental income in their respective tax returns. You cannot pay rent to your spouse.

Frequently asked questions

Can I claim HRA if I live in my own house?

No. Section 10(13A) requires that the employee actually incurs expenditure on rent for residential accommodation. If you live in a house you own, the entire HRA received is taxable.

Can I claim HRA and home loan deductions simultaneously?

Yes. If you own a home in one location (e.g. your hometown or away from your workplace) and live in a rented home near your job, you can claim both HRA exemption and Section 24(b) home loan interest under the old tax regime.

Is Bengaluru considered a metro for HRA calculations?

Under Income-tax Rule 2A, only four cities—Delhi, Mumbai, Kolkata, and Chennai—qualify for the 50% basic salary rate. All other cities, including Bengaluru, Hyderabad, and Pune, are categorized as non-metro and capped at 40% of basic salary.

Can I claim HRA directly in my ITR if I forgot to submit receipts to HR?

Yes. If you missed your employer's investment submission deadline, you can compute your exempt HRA using this calculator and claim the exemption directly under Section 10(13A) when filing your annual Income Tax Return.

Does HRA benefit me under the New Tax Regime?

No. HRA exemption is completely disallowed under the new tax regime (Section 115BAC). Compare your overall liability using our Income Tax Calculator (New Regime) before deciding which regime to choose.

Related tax tools

• Income Tax Calculator (Old Regime) — see how HRA exemption directly lowers your old regime tax liability.
• In-Hand Salary Calculator — calculate take-home pay after accounting for HRA and payroll deductions.
• Rent vs Buy Calculator — evaluate whether continuing to rent or buying a home with a mortgage makes better long-term financial sense.