Calculate maximum HRA exemption you can claim under section 10(13A).
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Formula
HRA exemption under Section 10(13A) is the LEAST of:
1. Actual HRA received from employer
2. Rent paid minus 10% of basic salary
3. 50% of basic salary if living in a metro city (Delhi, Mumbai, Kolkata, Chennai); 40% if non-metro
The remaining HRA (HRA received minus exemption) is added to taxable income.
Worked Examples
Basic salary: ₹6,00,000/year. HRA received: ₹3,00,000/year. Annual rent paid: ₹2,40,000 (₹20,000/month). Living in Mumbai (metro).
The three values: actual HRA = ₹3,00,000; rent − 10% basic = 2,40,000 − 60,000 = ₹1,80,000; 50% of basic = ₹3,00,000.
Least = ₹1,80,000. So ₹1,80,000 is exempt and ₹1,20,000 (3,00,000 − 1,80,000) is taxable.
About the HRA Calculator
House Rent Allowance (HRA) is one of the most effective tax-saving tools for salaried employees in India, especially for those living in major cities with high rents like Mumbai, Delhi, or Bengaluru. However, many taxpayers struggle to calculate the exact exemption amount and often claim less than they are entitled to. This HRA calculator helps you find the maximum tax-free component of your salary under the Old Tax Regime.
The Three-Step Rule of HRA Exemption
As per the Income Tax Act of India, the HRA exemption is the lowest of the following three amounts:
1. Actual HRA Received: The amount listed in your salary slip as HRA.
2. Rent Paid minus 10% of Basic Salary: (Monthly Rent - 0.10 * Basic Salary).
3. 50% of Basic Salary (Metro) or 40% (Non-Metro): Metro cities include Delhi, Mumbai, Kolkata, and Chennai. All other cities, even tech hubs like Bengaluru or Hyderabad, currently fall under the 40% category for HRA purposes.
Metro vs Non-Metro: The Bengaluru/Hyderabad Dilemma
A common point of frustration for many Indian tech workers is that despite having rents higher than Delhi or Chennai, Bengaluru, Hyderabad, and Pune are still technically 'Non-Metro' in the eyes of the Income Tax department. This means your exemption is capped at 40% of your basic salary instead of 50%. Our calculator lets you select the city type to ensure the math is 100% compliant with current tax laws.
Can You Pay Rent to Parents and Claim HRA?
Yes! This is a perfectly legal and popular tax-saving strategy in India. If you live with your parents, you can transfer rent to them and claim HRA exemption. However, there are strict compliance rules:
1. Rental Agreement: You should have a formal rental agreement between you and your parent.
2. Bank Transfers: The rent should be paid via bank transfer or cheque, not cash, to provide a clear audit trail.
3. Income Tax Return: Your parents must declare this rent as 'Income from House Property' in their own ITR. This works best if your parents are in a lower tax bracket than you.
4. No Rent to Spouse: You cannot claim HRA by paying rent to your spouse, as the tax department considers you a single 'living unit' for this purpose.
Documents Required: Rent Receipts and PAN
If your annual rent exceeds ₹1,00,000, it is mandatory to provide the PAN of your landlord to your employer to claim HRA. If the landlord doesn't have a PAN, you must obtain a signed declaration. Additionally, while you may only need to submit rent receipts to your HR once a year, you should keep all monthly receipts and the rental agreement safe in case of a tax audit.
HRA and Home Loan: Can You Claim Both?
This is a common question for Indian homeowners. Yes, you can claim HRA and Home Loan tax benefits (Section 24b and 80C) simultaneously if:
- You live in a rented house in the same city because your own house is too far from your workplace.
- You live in a different city for work while your family lives in the owned house.
- Your own house is still under construction.
Our calculator focuses on the HRA component, but you should use our Income Tax Calculator to see the combined impact of both on your total tax liability.
Frequently Asked Questions
Which cities are considered metros for HRA purposes?
Only four cities are classified as metros for HRA exemption: Delhi, Mumbai, Kolkata and Chennai. All others, including Bengaluru, Hyderabad, Pune and Ahmedabad, are non-metro for HRA — so the cap is 40% of basic, not 50%.
Is HRA exemption available under the new tax regime?
No. HRA exemption is available only under the old tax regime. If you opt for the new regime, you forfeit the HRA exemption along with most other deductions.
Do I need rent receipts and a rent agreement?
Yes. Submit rent receipts to your employer. If annual rent exceeds ₹1 lakh, you must also provide your landlord's PAN. Many employers also ask for the rent agreement.
Can I claim HRA if I pay rent to my parents?
Yes, provided the rent is genuine — your parents own the property, you pay the rent through bank transfer, and they declare it as income in their ITR. The exemption is otherwise computed exactly the same way.
What if I live in my own house?
If you don't pay rent, you cannot claim HRA exemption. The full HRA received from your employer becomes taxable. You may, however, claim home loan interest deduction under Section 24(b).