HRA Calculator
Calculate your House Rent Allowance exemption for metro and non-metro cities under the old tax regime. Free, privacy-first — inputs never leave your browser.
Details
Result
HRA Exemption
₹1,80,000
Taxable HRA
₹1,20,000
10% of basic
₹60,000
50% of basic
₹3,00,000
For estimation only. Not professional financial, tax, or legal advice. Consult a qualified advisor before making decisions. Full disclaimer.
What is HRA exemption?
House Rent Allowance (HRA) is a salary component paid by employers to meet rental housing costs. Under section 10(13A) of the Income-tax Act, a salaried taxpayer who actually pays rent can claim a partial exemption — only the excess HRA over the allowed limit is taxable. The full text of Rule 2A that governs the computation is published at incometaxindia.gov.in. HRA exemption is available only under the old tax regime; it is disallowed if you opt for the default new regime under section 115BAC.
How HRA exemption is calculated
Exemption is the minimum of the three figures below:
min( HRA received, Rent − 10% of Basic, 50%/40% of Basic )
50% applies if you live in Delhi, Mumbai, Kolkata, or Chennai; 40% in every other city, including Bengaluru, Hyderabad, and Pune (the IT Dept still classifies only the four original metros as "metro" for HRA). "Basic" means basic salary plus Dearness Allowance (if part of retirement benefits) plus any turnover-based commission.
Worked example — ₹12 lakh CTC, Mumbai
Basic ₹6,00,000/yr, HRA received ₹3,00,000, actual rent paid ₹25,000/month = ₹3,00,000/yr. The three figures are: (1) HRA received ₹3,00,000; (2) Rent − 10% of basic = 3,00,000 − 60,000 = ₹2,40,000; (3) 50% of basic = ₹3,00,000. The minimum is ₹2,40,000 — that is the exempt HRA. The balance ₹60,000 is added to taxable salary. At a 30% marginal slab, the exemption saves about ₹74,880 including cess.
Regulatory context
- Rule 2A of Income-tax Rules, 1962 — prescribes the three-figure minimum test.
- PAN of landlord must be reported if annual rent exceeds ₹1,00,000 (Circular 08/2013).
- Rent paid to parents is allowed if they declare it as rental income in their ITR.
- Form 12BB is the prescribed declaration to your employer for claiming HRA via payroll.
- Not available under the new regime — weigh HRA savings against the simpler slabs before opting.
Common mistakes
- Claiming HRA without actually paying rent. The IT Dept matches landlord PAN, AIS, and bank transfers — fictitious rent triggers reassessment under section 133(6).
- Wrong metro classification. Only Delhi, Mumbai, Kolkata, Chennai qualify for 50%. Bengaluru/Hyderabad are 40%.
- Including HRA while living in own house. You cannot claim HRA and home loan self-occupied benefit on the same property in the same city without a bonafide reason.
- Ignoring the 10% deductible. Only rent over 10% of basic counts — low-rent cities often yield low exemptions.
- Forgetting rent receipts. Keep monthly rent receipts and the rent agreement; the employer can disallow the claim in Form 16.
Related calculators and reading
See also: Old vs New Regime Calculator, Income Tax Calculator, Salary Calculator, Rent vs Buy Calculator, glossary: Section 80C.
Common questions about HRA
What is HRA and who can claim it?+
House Rent Allowance is a salary component paid by employers to help cover rent. Only salaried employees receiving HRA in their salary structure can claim the exemption, and only if they actually live in rented accommodation. Self-employed individuals can claim a similar benefit under Section 80GG (capped at ₹60,000/year). HRA exemption is available ONLY under the old tax regime from FY 2023-24 onward.
How is HRA exemption calculated?+
The exempt HRA is the LEAST of three amounts: (1) Actual HRA received from employer; (2) 50% of basic salary (metro: Delhi, Mumbai, Kolkata, Chennai) or 40% (non-metro); (3) Actual rent paid minus 10% of basic salary. Whichever is smallest is your exemption — the rest of the HRA becomes taxable. Basic salary includes dearness allowance if part of retirement benefits.
Which cities qualify as "metro" for HRA?+
Only four cities qualify as metro for HRA purposes: Delhi, Mumbai, Kolkata, and Chennai. Bengaluru, Hyderabad, Pune, and Ahmedabad are classified as non-metro for HRA (despite being large cities). Metro cities get 50% of basic salary as the cap; non-metro gets 40%. This can make ₹30,000-₹50,000 difference in annual exemption.
Do I need rent receipts to claim HRA?+
Yes. For annual rent above ₹1 lakh, you must also submit your landlord's PAN. Without PAN, the employer must deduct tax on the full HRA. Rent receipts should include: your name, landlord's name and signature, address, amount, period, revenue stamp for rent above ₹5,000/month. For rent above ₹50,000/month, 5% TDS applies (Section 194IB).
Can I pay rent to my parents and claim HRA?+
Yes, legally. Transfer rent via bank (not cash), get proper receipts, and have a formal rent agreement. Parents must declare rental income in their ITR and pay tax on it (after 30% standard deduction for rental income). The arrangement should be at genuine market rent — token amounts may be challenged by the tax officer. Works best when parents are retired/low-income.
Can I claim HRA and home loan interest simultaneously?+
Yes, in specific cases. If you own a home in one city but work/rent in another (for employment reasons), you can claim HRA on the rented home and Section 24(b) home loan interest (₹2L) on the owned one. Even within the same city, if your owned home is genuinely not habitable (under construction, let out) and you live elsewhere on rent, both are allowed with proper documentation.