Calculate HRA tax exemption under Indian income tax
Built & maintained by Pappu Venkata Subbi Reddy, founder of Clacify · Updated July 2026 · Formulas verified against official Indian government sources
The HRA Calculator works out how much of your House Rent Allowance is exempt from income tax under Section 10(13A). Salaried employees who live in rented accommodation can claim this exemption in the old tax regime — but the exempt amount is not simply the HRA your employer pays. It is the lowest of three separate limits, and most people over-estimate it. Enter your basic salary, the HRA you receive, the rent you actually pay, and whether you live in a metro city, and the calculator shows the exact exempt amount and how much HRA is added back to your taxable income.
The HRA exemption is the least of three amounts: (1) the actual HRA received from your employer; (2) the rent you paid minus 10% of your basic salary (plus DA); and (3) 50% of basic+DA if you live in a metro city (Delhi, Mumbai, Kolkata, Chennai) or 40% if you live anywhere else. The calculator computes all three and takes the smallest as your exemption; the balance of your HRA is taxable. HRA exemption is available only under the old tax regime — the new regime does not allow it. This is a planning estimate; keep rent receipts and your landlord's PAN (if annual rent exceeds ₹1 lakh) for your records.
| The three limits (annual) | Amount |
|---|---|
| 1. Actual HRA received | ₹3,00,000 |
| 2. Rent paid − 10% of basic (₹2,40,000 − ₹60,000) | ₹1,80,000 |
| 3. 50% of basic (metro) | ₹3,00,000 |
| Exempt HRA (lowest of the three) | ₹1,80,000 |
| Taxable HRA (added to income) | ₹1,20,000 |
The exemption is the LEAST of the three, so here ₹1.8 lakh is tax-free and ₹1.2 lakh is added to taxable income. For a non-metro city, limit 3 would be 40% of basic (₹2,40,000) instead of 50%.
Only four cities count as "metro" for HRA: Delhi, Mumbai, Kolkata and Chennai. If you live in one of them, limit 3 is 50% of your basic salary; everywhere else — including Bengaluru, Hyderabad and Pune — it is 40%. This single distinction can change your exemption by tens of thousands of rupees a year, so it's the first thing to get right. It's based on where you actually rent and live, not where your office or company is registered.
Yes — you can pay rent to a parent who owns the home and claim HRA, and it is a legitimate, commonly used arrangement. But it must be genuine: transfer the rent by bank every month, have a rent agreement, and remember your parent must declare that rent as income in their own tax return. Paying "rent" to a spouse, or paper arrangements with no actual money moving, are exactly what the tax department disallows on scrutiny.
The HRA exemption exists only in the old regime. If you opt for the new regime (the default from FY 2025-26), you cannot claim it — the trade-off is the new regime's lower slab rates and the ₹12 lakh rebate. For someone paying high metro rent, a large HRA exemption is often the single biggest reason the old regime still works out cheaper, so run both before you decide.
HRA exemption = minimum of: (1) Actual HRA received, (2) Rent paid − 10% of Basic+DA, (3) 50% of Basic+DA for metro or 40% for non-metro. Example: Basic ₹5L/yr, HRA ₹2L/yr, Rent ₹2.4L/yr, Metro. Min of (₹2L, ₹1.9L, ₹2.5L) = ₹1.9 lakh exempt. Remaining ₹10,000 HRA is taxable.
Yes. You can pay rent to your parents and claim HRA exemption, provided: (1) you have a formal rent agreement, (2) you pay by bank transfer, and (3) your parents declare it as rental income in their ITR. This is a legitimate tax-saving strategy, especially if parents are in a lower tax bracket.