What is HRA and HRA Exemption?
House Rent Allowance (HRA) is a part of salary that employers pay to help employees meet rent. If you live in a rented house, a part of your HRA can be claimed as tax-exempt under Section 10(13A) of the Income-tax Act, which reduces your taxable salary. The exemption is available only under the old tax regime.
This HRA exemption calculator uses the official three-rule formula to show the exempt amount and the taxable HRA.
HRA Exemption Formula (Least of Three)
The exempt HRA is the least of these three amounts:
- The actual HRA received from your employer.
- Rent paid minus 10% of (basic salary + DA).
- 50% of (basic + DA) if you live in a metro city, or 40% in any other city.
Taxable HRA = HRA received − Exempt HRA
HRA Exemption Examples
| Basic + DA | HRA received | Rent paid | City | Exempt HRA | Taxable HRA |
|---|---|---|---|---|---|
| ₹6,00,000 | ₹2,40,000 | ₹2,40,000 | Metro | ₹1,80,000 | ₹60,000 |
| ₹6,00,000 | ₹2,40,000 | ₹2,40,000 | Non-metro | ₹1,80,000 | ₹60,000 |
| ₹8,00,000 | ₹3,20,000 | ₹1,80,000 | Non-metro | ₹1,00,000 | ₹2,20,000 |
| ₹10,00,000 | ₹4,00,000 | ₹3,00,000 | Metro | ₹2,00,000 | ₹2,00,000 |
Example: ₹6 lakh basic, ₹20,000 monthly rent
Rent paid is ₹2.4 lakh a year. Rule 1: HRA received = ₹2,40,000. Rule 2: 2,40,000 − 60,000 = ₹1,80,000. Rule 3 (metro): 50% × 6,00,000 = ₹3,00,000. The least is ₹1,80,000, which is your exempt HRA; the remaining ₹60,000 is taxable.
Which Cities Count as Metro for HRA?
Delhi, Mumbai, Kolkata and Chennai have long been treated as metro cities for the 50% rate. Under the Income-tax Rules, 2026, Bengaluru, Hyderabad, Pune and Ahmedabad are added from FY 2026-27, making it eight cities. All other cities use 40%. Check the latest CBDT notification for the year you are filing.
Documents and Rules to Claim HRA
- Rent receipts or a rental agreement, and proof of payment (bank transfer is best).
- Landlord’s PAN if the rent you pay is more than ₹1 lakh in a year.
- You must actually pay rent. Paying rent to your parents is allowed if it is genuine and they show it as income.
- You cannot claim HRA if you do not pay rent. In that case, Section 80GG may allow a limited deduction (old regime).
HRA is not available under the new tax regime. To compare the two regimes for your salary, use the salary calculator.
How to Use This HRA Calculator
- Enter your annual basic salary plus DA.
- Enter the annual HRA you receive and the annual rent you pay.
- Select your city type (metro or non-metro).
- Read the exempt and taxable HRA. Save a report with Preview & Save.
Tips to Maximise Your HRA Exemption
- Pay rent by bank transfer and keep proof for every month.
- If you pay rent to a family member, sign a rent agreement and make sure they declare it as income.
- Declare the correct city type. Claiming metro rates in a non-metro city can lead to a notice.
- Submit rent receipts to your employer on time to avoid higher TDS during the year, or claim it while filing your return.
- If your HRA exemption is small, check whether the new regime gives a better take-home pay with the salary calculator.