HRA Exemption Calculator
Section 10(13A). Old tax regime only — HRA is fully taxable under the new regime.
All figures annual. Keep rent receipts, and your landlord's PAN if annual rent exceeds ₹1,00,000.
How HRA exemption is calculated
House Rent Allowance is only partly tax free, and the exempt part is not a percentage anyone chooses. Section 10(13A) says it is the least of three figures:
- The actual HRA received from your employer
- Rent paid minus 10% of salary
- 50% of salary if you live in a metro, 40% if you do not
Whichever of those three is smallest is your exemption. The rest of your HRA is taxable.
Because it is a “least of three” rule, the binding constraint moves around. Someone paying low rent is usually limited by figure 2. Someone in a metro on a high rent is usually limited by figure 1 or 3. The calculator shows all three so you can see which one is actually costing you.
What “salary” means here
This is where most manual calculations go wrong. For HRA purposes, salary means Basic + Dearness Allowance (to the extent it forms part of retirement benefits) + commission based on a fixed percentage of turnover.
It does not include HRA itself, conveyance, special allowance, overtime, bonus or any other allowance. Using gross salary here inflates figures 2 and 3 and produces a wrong answer every time.
Which cities count as metro
Only four, and the list is narrower than most people assume: Delhi, Mumbai, Kolkata and Chennai. Bengaluru, Hyderabad, Pune, Ahmedabad and Gurugram are not metros for HRA, whatever the rent there suggests. They take 40%.
The condition that catches people out
HRA exemption is available only under the old tax regime. If you have opted for the new regime, HRA is fully taxable and this calculation does not apply to you at all.
That single fact changes the regime comparison for anyone paying serious rent, and it is worth running both ways before choosing. Our income tax calculator compares the two regimes side by side.
What you need to keep
- Rent receipts for the year
- A rent agreement, if your employer asks for one
- Your landlord’s PAN if annual rent exceeds ₹1,00,000. Without it the exemption is commonly disallowed at verification.
- Rent paid to a parent is allowed, but it must be a genuine arrangement — actually paid, and declared as income by the parent.
A worked example
Basic ₹50,000 a month, HRA received ₹20,000 a month, rent paid ₹18,000 a month, living in Pune (non-metro). Annually:
- Actual HRA received: ₹2,40,000
- Rent paid − 10% of salary: ₹2,16,000 − ₹60,000 = ₹1,56,000
- 40% of salary: ₹2,40,000
The least is ₹1,56,000, so that is exempt and the remaining ₹84,000 of HRA is taxable. Here the rent is the binding constraint — paying ₹5,000 more rent a month would raise the exemption, paying more HRA would not.
Frequently asked questions
Can I claim HRA under the new tax regime?
No. HRA exemption is available only under the old regime. Under the new regime the entire HRA is taxable.
Is Bengaluru a metro for HRA?
No. Only Delhi, Mumbai, Kolkata and Chennai count as metros for HRA. Bengaluru, Hyderabad, Pune and Gurugram all use the 40% figure.
Do I need my landlord’s PAN?
If your annual rent is more than ₹1,00,000, yes. Employers routinely disallow the exemption at verification without it.
Can I claim HRA if I pay rent to my parents?
Yes, provided it is a real arrangement — the rent is actually paid, ideally by bank transfer, and your parent declares it as income. It is legitimate, but it is also closely examined.
Can I claim HRA and a home loan deduction together?
Yes, if the facts support both — for example you own a house in one city and genuinely rent in another for work. Both claims must stand on their own merits.
What if I did not get HRA as part of my salary?
Then Section 10(13A) does not apply. A salaried person without an HRA component may be able to claim a deduction for rent under Section 80GG instead, which has its own, much lower, limits.
For payroll teams collecting these declarations
One employee’s exemption is arithmetic. Collecting, verifying and applying the declarations of two hundred employees, each with different rent, city and regime, is a process problem.
In HivePayroll employees submit their own investment declarations, the form filters what it offers by the employee’s tax regime, and the accepted figures flow straight into the monthly TDS computation and the employee’s tax sheet. See TDS and income tax management, or book a free demo.
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