HRA Calculator – House Rent Allowance Tax Exemption Calculator
Calculate your HRA tax exemption under Section 10(13a) for metro and non-metro cities. Free online HRA calculator to compute house rent allowance deduction, tax savings, and taxable HRA amount for income tax return filing in India.
HRA Calculator Input
(50% of Basic)
(40% of Basic)
HRA Exemption Formula (Section 10(13a))
Exemption = Minimum of:
- Actual HRA Received
- 50% of Basic (Metro) / 40% of Basic (Non-Metro)
- Rent Paid – 10% of Basic Salary
HRA Tax Exemption Results
HRA Tax Exemption (Under Section 10(13a))
Condition 1: Actual HRA Received
Condition 2: 50%/40% of Basic Salary
Condition 3: Rent Paid – 10% of Basic
Taxable HRA Amount
Annual Tax Savings (30% Bracket)
Metro vs Non-Metro HRA Exemption Comparison
| Parameter | Metro City | Non-Metro City | Difference |
|---|---|---|---|
| Basic Salary | ₹50,000 | ₹50,000 | – |
| 50%/40% of Basic | ₹25,000 | ₹20,000 | ₹5,000 |
| HRA Exemption | ₹20,000 | ₹20,000 | ₹0 |
| Annual Tax Savings (30%) | ₹72,000 | ₹72,000 | ₹0 |
What is HRA (House Rent Allowance)?
House Rent Allowance (HRA) is a component of salary paid by employers to employees for accommodation expenses. Under Section 10(13a) of the Income Tax Act, a portion of HRA is exempt from taxation, reducing your taxable income and tax liability. HRA exemption is only available under the old tax regime and requires actual rent payment proof.
How HRA Calculator Works
Our HRA tax exemption calculator computes the tax-free portion of your house rent allowance based on Income Tax rules:
- Input Your Salary Details: Enter monthly basic salary and HRA received from employer
- Enter Rent Paid: Input actual monthly rent paid for rented accommodation
- Select City Type: Choose between Metro (Mumbai, Delhi, Kolkata, Chennai) or Non-Metro cities
- Calculate Exemption: Calculator finds minimum of three conditions as per Section 10(13a)
- Tax Savings: Shows annual tax benefit and taxable HRA amount for ITR filing
HRA Calculation Formula Under Section 10(13a)
The HRA exemption is calculated as the minimum of the following three amounts:
HRA Exemption = Least of:
- Actual HRA Received from Employer
Example: If you receive ₹20,000 per month as HRA - 50% of Basic Salary (Metro) or 40% (Non-Metro)
Metro Cities: Mumbai, Delhi, Kolkata, Chennai = 50%
Non-Metro Cities: Bangalore, Pune, Hyderabad, etc. = 40% - Actual Rent Paid Minus 10% of Basic Salary
Formula: (Rent Paid – 10% of Basic Salary)
Example: Rent ₹25,000 – (10% of ₹50,000) = ₹20,000
Example Calculation:
- Basic Salary: ₹50,000 per month
- HRA Received: ₹20,000 per month
- Rent Paid: ₹25,000 per month
- City: Metro (Mumbai)
Three Conditions:
- Actual HRA = ₹20,000
- 50% of Basic = ₹25,000
- Rent – 10% of Basic = ₹25,000 – ₹5,000 = ₹20,000
HRA Exemption = ₹20,000 (minimum of three)
Taxable HRA = ₹0 (₹20,000 – ₹20,000)
Annual Tax Savings (30% bracket) = ₹72,000 (₹20,000 × 12 × 30%)
Metro vs Non-Metro Cities for HRA
| City Classification | Cities Included | HRA Percentage |
|---|---|---|
| Metro Cities | Mumbai, Delhi, Kolkata, Chennai | 50% of Basic Salary |
| Non-Metro Cities | Bangalore, Pune, Hyderabad, Ahmedabad, Jaipur, Lucknow, and all other cities | 40% of Basic Salary |
Important Note: Bangalore, Pune, and Hyderabad are NOT metro cities for HRA calculation purposes, even though they are major IT hubs. Only Mumbai, Delhi, Kolkata, and Chennai qualify for 50% exemption.
HRA Exemption Rules and Conditions
You CAN claim HRA exemption if:
- ✅ You are a salaried employee receiving HRA as part of salary
- ✅ You are living in a rented house/apartment (not owned by you)
- ✅ You have actually paid rent (have proof – receipts, bank transfers)
- ✅ You are filing income tax return under old tax regime
- ✅ You have rental agreement and landlord details
You CANNOT claim HRA exemption if:
- ❌ Living in own house or property owned by you
- ❌ Living in parents’ house without paying rent
- ❌ Employer provides rent-free accommodation
- ❌ Not receiving HRA component in salary
- ❌ Opted for new tax regime (exemptions not allowed)
- ❌ Self-employed or freelancer (HRA only for salaried)
Documents Required for HRA Exemption
To claim HRA exemption, keep these documents ready:
- Rent Receipts: Monthly or quarterly rent receipts signed by landlord. If monthly rent >₹15,000, revenue stamp required on receipts.
- Rental Agreement: Copy of rent agreement between you and landlord showing property address, rent amount, duration, terms.
- Landlord PAN Card: Mandatory if annual rent exceeds ₹1,00,000. Must be submitted to employer and mentioned in ITR.
- Rent Payment Proof: Bank statements showing rent payment via cheque/NEFT/UPI. Avoid cash payments above ₹10,000.
- Address Proof: Utility bills (electricity, water) showing you live at rented property.
Retention Period: Keep all HRA documents for minimum 6 years in case of income tax scrutiny or assessment.
How to Claim HRA in Income Tax Return (ITR)
Step 1: Submit Details to Employer
Provide HRA details during annual investment declaration (usually January-February). Employer will calculate exemption and show in Form 16 under Section 10(13a). This reduces monthly TDS deduction.
Step 2: File ITR with HRA Exemption
- Login to Income Tax e-filing portal
- Select ITR-1 (if salary income only) or ITR-2
- Go to “Salary” section → “Allowances to extent exempt u/s 10”
- Enter HRA exemption amount in Schedule AL
- If rent >₹1L/year, enter landlord PAN in “Details of payments made”
Step 3: Verify and Submit
Check that ITR computation shows HRA exemption under Section 10(13a). Verify total income, tax calculation, and file ITR. E-verify using Aadhaar OTP or net banking.
Can I Pay Rent to Parents and Claim HRA?
Yes, you can pay rent to parents and claim HRA exemption, but with conditions:
- ✅ Parents must own the property (house should be in their name)
- ✅ Rental agreement between you and parents required
- ✅ Pay rent via bank transfer (maintain proof)
- ✅ Rent should be reasonable market rate (not inflated)
- ✅ Parents must show rental income in their income tax return
- ✅ Parents cannot be your dependents for tax purposes
Tax Implications for Parents:
Rental income received from you will be taxable for parents under “Income from House Property”. They can claim standard deduction of 30% on rental income and also deduct municipal taxes paid. Net rental income added to their total income.
HRA Exemption Limit and Maximum Amount
Is there a limit on HRA exemption?
No, there is no maximum limit on HRA exemption amount. The exemption depends on your actual salary, HRA received, and rent paid. However, the exemption cannot exceed the actual HRA received from employer.
Examples of HRA Limits:
- If HRA received = ₹10,000, exemption cannot exceed ₹10,000 even if rent is ₹50,000
- If basic salary = ₹1,00,000 (metro), maximum from condition 2 = ₹50,000
- If rent paid = ₹80,000 and basic = ₹1,00,000, condition 3 = ₹70,000
HRA Deduction in New Tax Regime
Important: HRA exemption is NOT available in the new tax regime introduced from FY 2020-21.
| Tax Regime | HRA Exemption | Best For |
|---|---|---|
| Old Tax Regime | ✅ Full HRA exemption under Section 10(13a) | Salaried employees with high HRA, 80C investments, home loan |
| New Tax Regime | ❌ No HRA exemption allowed | Employees with low HRA, no investments, prefer lower tax rates |
Which Regime to Choose?
Calculate tax under both regimes. If HRA exemption + 80C deductions + home loan interest exceeds ₹2.5 lakh, old regime usually better. Use tax calculator to compare both options before choosing in ITR.
HRA Exemption for Different Salary Scenarios
Scenario 1: High Rent in Metro City
- Basic Salary: ₹80,000/month
- HRA Received: ₹40,000/month
- Rent Paid: ₹50,000/month (Mumbai)
- Exemption = Min(₹40,000, ₹40,000, ₹42,000) = ₹40,000
- Annual Tax Savings (30%): ₹1,44,000
Scenario 2: Lower Rent in Non-Metro
- Basic Salary: ₹50,000/month
- HRA Received: ₹15,000/month
- Rent Paid: ₹12,000/month (Pune)
- Exemption = Min(₹15,000, ₹20,000, ₹7,000) = ₹7,000
- Taxable HRA: ₹8,000, Annual Tax Savings (20%): ₹16,800
Scenario 3: HRA Less Than Rent
- Basic Salary: ₹1,00,000/month
- HRA Received: ₹30,000/month
- Rent Paid: ₹60,000/month (Bangalore – Non-Metro)
- Exemption = Min(₹30,000, ₹40,000, ₹50,000) = ₹30,000
- Full HRA exempt, Annual Tax Savings (30%): ₹1,08,000
Frequently Asked Questions (FAQ)
Q1: What is the full form of HRA in salary?
A: HRA stands for House Rent Allowance. It is a component of salary paid by employers to employees for accommodation expenses.
Q2: Is Bangalore a metro city for HRA calculation?
A: No, Bangalore is NOT a metro city for HRA purposes. Only Mumbai, Delhi, Kolkata, and Chennai qualify as metro cities (50% exemption). Bangalore gets 40% (non-metro).
Q3: Can I claim HRA if living in own house?
A: No, HRA exemption is not allowed if you live in a house owned by you. You must be living in rented accommodation and actually paying rent.
Q4: What if I don’t have rent receipts?
A: Rent receipts are mandatory to claim HRA exemption. Without proof of rent payment, you cannot claim the exemption. Maintain monthly rent receipts with revenue stamp if rent >₹15,000.
Q5: Is landlord PAN mandatory for HRA claim?
A: Landlord PAN is mandatory only if annual rent exceeds ₹1,00,000 (₹8,334 per month). Below this limit, PAN not required but rent receipts still needed.
Q6: How much HRA is tax-free?
A: The tax-free portion is the minimum of: (1) Actual HRA received, (2) 50%/40% of basic salary, (3) Rent paid minus 10% of basic. There’s no fixed limit.
Q7: Can I claim both HRA exemption and home loan deduction?
A: Yes, if you have home loan on one property and living in rented house in another city. You can claim HRA for rented house AND home loan interest (Section 24) + principal (Section 80C) on owned property.
Q8: What is Section 10(13a) in income tax?
A: Section 10(13a) of Income Tax Act provides exemption for House Rent Allowance received by salaried employees, subject to conditions of actual rent payment and calculation formula.
Q9: How to calculate HRA exemption in Excel?
A: Use formula: =MIN(HRA_Received, IF(Metro, 0.5*Basic, 0.4*Basic), MAX(0, Rent-0.1*Basic)). This calculates minimum of three conditions automatically.
Q10: Can HRA exemption be claimed without proof?
A: No, proof is mandatory. If monthly rent >₹3,000, you must submit rent receipts to employer. Keep rental agreement, rent receipts, landlord PAN (if applicable) for IT department scrutiny.
HRA Calculation for 7th Pay Commission Employees
For central government employees under 7th Pay Commission:
- Metro Cities: 27% of Basic Pay + DA (for Mumbai, Delhi, Kolkata, Chennai)
- Cities >10 lakh population: 18% of Basic Pay + DA
- Cities >5 lakh population: 9% of Basic Pay + DA
HRA Exemption Calculation: Same three-condition formula applies. For government employees, “salary” for HRA means Basic Pay + Dearness Allowance (DA). Other allowances not included.
Tips to Maximize HRA Exemption
- Negotiate Higher HRA Component: During salary negotiation, request higher HRA allocation within CTC. Higher HRA = more tax exemption potential.
- Pay Rent to Parents: If parents own property, pay them rent via bank transfer. You get HRA exemption, they can claim 30% standard deduction on rental income.
- Keep All Documents: Maintain rent receipts, rental agreement, bank statements for 6 years. Digital scans recommended for easy access during ITR filing.
- Plan City Location: If flexibility exists, metro city jobs give 50% vs 40% exemption. Example: ₹1L basic, metro gets ₹50K vs non-metro ₹40K (₹10K difference).
- Compare Old vs New Regime: Calculate tax under both regimes annually. If HRA + other deductions high, old regime saves more despite higher tax rates.