HRA Exemption Calculator

Calculate your annual House Rent Allowance (HRA) exemption under Section 10(13A) of the Income Tax Act. The tool evaluates all three statutory conditions and returns the minimum — your valid tax-free HRA amount for FY 2025-26.

Last Updated: June 2026•Verified By: GSTWaala Editorial Team

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Salary & Rent Details

Basic Salary (Monthly)Enter your monthly basic salary component

Dearness Allowance — DA (Monthly)Enter 0 if your employer doesn't pay DA

HRA Received (Monthly)Monthly HRA component shown on your salary slip

Rent Paid (Monthly)Actual monthly rent paid to your landlord

City Type

Metro City selected: The 50% rule applies — Section 10(13A) grants an exemption up to 50% of (Basic + DA) per year for employees in Mumbai, Delhi, Kolkata, and Chennai.

HRA Exemption Breakdown

Enter your salary and rent details to compute HRA exemption.

How to Use the HRA Exemption Calculator

Enter your monthly Basic Salary as shown on your pay slip. This is the fixed component before any allowances or deductions are added.
Enter your monthly Dearness Allowance (DA). If your employer does not pay DA — common in private-sector jobs — enter 0.
Enter the monthly HRA component received from your employer exactly as mentioned in your CTC break-up or Form 16.
Enter the actual monthly rent you pay to your landlord. Ensure you have valid rent receipts or a registered rent agreement to claim this exemption.
Select your city type: choose 'Metro City' if you live in Mumbai, Delhi, Kolkata, or Chennai — the exemption cap is 50% of (Basic+DA). Select 'Non-Metro' for all other cities — the cap is 40% of (Basic+DA). The calculator instantly computes all three methods and highlights the minimum in green — that is your annual HRA exemption.

Mathematical Formula & Calculations

HRA exemption under Section 10(13A) read with Rule 2A of the Income Tax Act is calculated as the minimum of the following three amounts computed on an annual basis:

(a) Actual HRA Received from Employer

Method A = HRA Received (Monthly) × 12

This is the total House Rent Allowance disbursed by your employer over the full financial year as shown in Form 16, Part B.

(b) Rent Paid Minus 10% of (Basic + DA)

Method B = MAX(0, (Rent Paid/month − 10% × (Basic + DA)/month) × 12)

If the result is negative (i.e., rent paid is less than 10% of Basic+DA), this method contributes ₹0 and no exemption under the rent-paid route is available. You must pay rent in excess of 10% of (Basic+DA) for this method to add value.

(c) 50% / 40% of (Basic + DA) — City Multiplier

Metro Cities: Method C = 50% × (Basic + DA)/month × 12

Non-Metro Cities: Method C = 40% × (Basic + DA)/month × 12

The four metro cities designated by the IT Act are Mumbai, Delhi, Kolkata, and Chennai. All other cities — including Bangalore, Hyderabad, Pune, Ahmedabad — are treated as non-metro for HRA purposes.

Final HRA Exemption (Annual)

HRA Exemption = MIN(Method A, Method B, Method C)

Taxable HRA = Method A − HRA Exemption

The taxable HRA is added back to your gross taxable income and is taxed at your applicable income tax slab rate.

Worked Example — Metro City Employee

Parameter	Value
Basic Salary (Monthly)	₹50,000
DA (Monthly)	₹0
HRA Received (Monthly)	₹20,000
Rent Paid (Monthly)	₹18,000
City	Mumbai (Metro)

Method A = ₹20,000 × 12 = ₹2,40,000
Method B = (₹18,000 − 10% × ₹50,000) × 12 = (₹18,000 − ₹5,000) × 12 = ₹13,000 × 12 = ₹1,56,000
Method C = 50% × ₹50,000 × 12 = ₹25,000 × 12 = ₹3,00,000
HRA Exemption = MIN(₹2,40,000, ₹1,56,000, ₹3,00,000) = ₹1,56,000
Taxable HRA = ₹2,40,000 − ₹1,56,000 = ₹84,000

Frequently Asked Questions

Under Section 10(13A) read with Rule 2A of the Income Tax Act, HRA exemption is the MINIMUM of: (a) Actual HRA received from employer annually; (b) Rent paid minus 10% of (Basic Salary + DA) annually — if this is negative, it equals ₹0; (c) 50% of (Basic Salary + DA) annually for Metro cities (Mumbai, Delhi, Kolkata, Chennai) or 40% for all other cities. The lowest of these three amounts becomes the tax-exempt HRA.

Yes, you can claim HRA exemption by paying rent to your parents, provided the arrangement is genuine. The rent payments must be real monetary transfers (bank transfers recommended), your parent must declare this as rental income in their own ITR, and you must hold a valid rent agreement and rent receipts. The Income Tax Department scrutinises these transactions closely, so maintaining proper documentation is essential.

The Income Tax Act mandates that only rent paid in excess of 10% of (Basic Salary + Dearness Allowance) qualifies for exemption under Method (b). For example, if your Basic+DA is ₹60,000/month, you must pay more than ₹6,000/month in rent for Method (b) to contribute any positive amount. If your rent is below this threshold, Method (b) yields ₹0, and the exemption is derived from the minimum of Methods (a) and (c) alone.

No. HRA exemption under Section 10(13A) is not available if you opt for the New Tax Regime introduced under Section 115BAC of the Income Tax Act. This is a significant trade-off for high-rent metropolitan employees, as the standard deduction of ₹75,000 under the New Regime may not fully compensate for a large HRA exemption. Use this calculator to compare your tax liability under both regimes.

Related Calculators

Compliance Note

All calculations are updated to reflect the tax codes, slabs, and deductions in effect for Financial Year 2025-26 (Assessment Year 2026-27). This tool runs entirely client-side; no data is transmitted or stored on our servers.

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1. What Is House Rent Allowance (HRA)?

House Rent Allowance (HRA) is a component of an employee's salary package paid by the employer to help meet the cost of rented accommodation. Governed by Section 10(13A) of the Income Tax Act, 1961 read with Rule 2A of the Income Tax Rules, a portion (or in some cases all) of the HRA received is exempt from income tax — provided the employee is actually paying rent for residential accommodation.

For salaried individuals, HRA is one of the most valuable tax benefits available under the Old Tax Regime. Employees in high-rent metro cities often save tens of thousands of rupees annually through this exemption. The amount of exemption is NOT simply the HRA received — it is determined by a three-condition test, and the lowest of the three computed values becomes the exempt HRA.

2. Who Can Claim HRA Exemption?

To claim the HRA exemption under Section 10(13A), all of the following conditions must be met simultaneously:

Salaried Employee: HRA exemption applies only to salaried individuals. Self-employed individuals, freelancers, and business owners cannot claim HRA exemption (though they may claim rent as a business expense under Section 80GG if they don't receive HRA).
HRA Must Be Part of Salary: The employer must formally designate HRA as a separate allowance component in the employee's salary structure. Ad-hoc reimbursements not listed in the offer letter do not qualify.
Actual Rent Must Be Paid: The employee must be paying rent for residential accommodation actually occupied and not owned by the employee, their spouse, or minor children.
Old Tax Regime Only: HRA exemption is available exclusively under the Old Tax Regime (Section 115BA). If you opt for the New Tax Regime, the entire HRA received becomes taxable.
PAN of Landlord Required (above ₹1 lakh annually): If the annual rent paid exceeds ₹1,00,000, the employee must furnish the PAN number of their landlord to the employer for Form 16 purposes.

3. Metro vs Non-Metro City Classification for HRA

The Income Tax Act classifies only four cities as metro cities for HRA purposes, attracting a higher 50% exemption rate on (Basic + DA):

City	Classification	Method C Rate
Mumbai (including Navi Mumbai & Thane)	Metro	50% of (Basic+DA)
Delhi (NCT)	Metro	50% of (Basic+DA)
Kolkata	Metro	50% of (Basic+DA)
Chennai	Metro	50% of (Basic+DA)
Bangalore	Non-Metro	40% of (Basic+DA)
Hyderabad	Non-Metro	40% of (Basic+DA)
Pune	Non-Metro	40% of (Basic+DA)
Ahmedabad	Non-Metro	40% of (Basic+DA)
All other cities & towns	Non-Metro	40% of (Basic+DA)

Note: Despite being major tech hubs and tier-1 cities with very high rental costs, Bangalore, Hyderabad, and Pune are classified as non-metro for Income Tax HRA purposes. Many taxpayers in these cities are unaware of this and incorrectly apply the 50% rule. This calculator ensures the correct rate is applied.

4. Documents Required to Claim HRA Exemption

While HRA exemption is computed at the employer level (reflected in Form 16) or self-declared while filing ITR, the following documents must be maintained:

Rent Receipts: Stamped rent receipts (on ₹1 revenue stamp if rent exceeds ₹5,000/month) signed by the landlord, containing the address, period, and amount.
Rent Agreement: A registered or notarised tenancy agreement clearly specifying the rental amount, duration, and parties involved.
Landlord's PAN: Mandatory if annual rent exceeds ₹1,00,000 (i.e., monthly rent above ~₹8,334). Must be submitted to the employer.
Bank Transfer Records: Highly recommended (over cash payments) to establish a verifiable audit trail — especially when paying rent to family members.
Form 12BB: Declaration form submitted to employer at the beginning of each financial year declaring expected HRA claim, rent amount, and landlord details.

5. HRA Exemption in New Tax Regime — Key Consideration

Effective from FY 2020-21, the Government of India introduced an alternative New Tax Regime under Section 115BAC with concessional slab rates but without major exemptions and deductions. Under the New Regime:

The entire HRA received from the employer is fully taxable — no Section 10(13A) exemption is allowed.
Deductions under 80C (ELSS, PPF, EPF, LIC), 80D (medical insurance), and HRA exemption are all forfeited.
Only the Standard Deduction of ₹75,000 (from FY 2024-25) and employer's EPF contribution are allowed.

For employees in metro cities paying high rents (e.g., ₹25,000+ per month), the HRA exemption benefit under the Old Regime can easily exceed ₹2–3 lakh annually, making the Old Regime more advantageous despite higher headline slab rates. Always compare both regimes using your actual numbers before making the annual declaration.