House Rent Allowance (HRA) is a component of your salary paid by the employer to cover rental expenses. If you live in a rented house, a portion of this HRA can be claimed as tax-exempt under Section 10(13A) of the Income Tax Act — reducing your taxable income.

The exemption is not the full HRA amount. It is the lowest of three values calculated based on your basic salary, actual HRA received, and rent paid. This rule applies only under the old tax regime — HRA exemption is not available under the new tax regime.

HRA Exemption Formula — The Three Conditions

The exempt HRA is the minimum of these three amounts:

Condition	Formula	Metro / Non-Metro
1. Actual HRA received	As per salary slip	Same for both
2. Rent paid minus 10% of basic	Actual rent paid − (10% × Basic Salary)	Same for both
3. % of Basic Salary	50% of Basic (metro) / 40% of Basic (non-metro)	Different

Metro cities for HRA purposes: Delhi, Mumbai, Kolkata, Chennai. All other cities — including Bangalore, Hyderabad, Pune, Ahmedabad — are treated as non-metro for HRA calculation, despite being large cities.

HRA Exemption Reference Examples (FY 2025–26)

Old tax regime. Basic = monthly basic salary × 12. All figures are annual.

Basic (Annual)	HRA Received	Rent Paid	City	Exempt HRA	Taxable HRA
₹3,00,000	₹1,20,000	₹1,80,000	Metro	₹1,20,000	₹0
₹3,00,000	₹1,20,000	₹96,000	Metro	₹66,000	₹54,000
₹5,00,000	₹2,00,000	₹1,80,000	Metro	₹1,30,000	₹70,000
₹5,00,000	₹2,00,000	₹1,80,000	Non-Metro	₹1,30,000	₹70,000
₹6,00,000	₹2,40,000	₹2,40,000	Metro	₹2,40,000	₹0
₹8,00,000	₹3,00,000	₹2,40,000	Metro	₹1,60,000	₹1,40,000
₹10,00,000	₹4,00,000	₹3,60,000	Non-Metro	₹2,60,000	₹1,40,000

Enter your exact figures in the calculator above — the exemption shifts significantly based on the rent-to-salary ratio and city type.

How to Use This Calculator

Enter Basic Salary (Annual) — your annual basic pay, not gross salary or CTC
Enter Dearness Allowance (DA) if applicable — most private sector employees have zero DA
Enter HRA Received (Annual) — the HRA component shown in your salary slip × 12
Enter Total Rent Paid (Annual) — actual rent paid × 12 (exclude maintenance, electricity)
Select city type — Metro (Delhi, Mumbai, Kolkata, Chennai) or Non-Metro
Results show instantly — Exempt HRA and Taxable HRA with the three-condition breakdown

Tip: If you pay rent to a family member, HRA exemption is allowed only if the arrangement is genuine, rent is actually transferred, and the family member declares it as income. Paying rent to a spouse is generally not accepted by the IT department.

Features

Calculates all three HRA conditions automatically — shows which one is the limiting factor
Separate metro and non-metro calculation — 50% vs 40% of basic applied correctly
Shows exact taxable HRA — useful for ITR filing and Form 16 verification
Supports DA input — relevant for government and PSU employees
Instant results — no submission, no login needed

Why Your HRA Exemption May Be Lower Than Expected

The most common reason: rent paid is not high enough relative to basic salary. Condition 2 — rent paid minus 10% of basic — often becomes the limiting factor when rent is moderate. If your annual basic is ₹6 lakh and you pay ₹15,000/month rent (₹1.8 lakh/year), condition 2 gives only ₹1.8L − ₹60K = ₹1.2 lakh, even though your HRA received and 50% of basic may both be higher.

Another common issue: Bangalore, Hyderabad, and Pune are treated as non-metro cities for HRA purposes — so only 40% of basic applies as the ceiling in condition 3, not 50%. Many employees in these cities calculate using 50% and get a higher-than-correct exemption figure.

HRA exemption is available only under the old tax regime. If you have opted for the new tax regime for FY 2025–26, HRA received is fully taxable regardless of rent paid.

Frequently Asked Questions (FAQ)

No. For HRA exemption under Section 10(13A), only Delhi, Mumbai, Kolkata, and Chennai are treated as metro cities — where 50% of basic applies. Bangalore, Hyderabad, Pune, Ahmedabad, and all other cities are non-metro — only 40% of basic applies as the ceiling.

Yes, paying rent to parents is allowed and is a common tax-saving method. The rent must be actually paid (bank transfer recommended), and your parents must declare it as rental income in their ITR. A written rent agreement and rent receipts are required. Paying rent to a spouse is generally not accepted by the Income Tax department.

Annual basic = ₹3,60,000. If HRA received is ₹1,44,000/year and rent paid is ₹1,80,000/year: Condition 1 = ₹1,44,000 | Condition 2 = ₹1,80,000 − ₹36,000 = ₹1,44,000 | Condition 3 = 40% × ₹3,60,000 = ₹1,44,000. Exempt HRA = ₹1,44,000 (all three give the same result here). Enter your exact figures in the calculator for your specific case.

No. HRA exemption under Section 10(13A) is only available under the old tax regime. If you have opted for the new tax regime, the entire HRA received is added to your taxable income. This is one of the key deductions to compare when deciding between old and new regime.

Yes, for annual HRA above ₹1 lakh, you must submit rent receipts to your employer for TDS exemption. If annual rent exceeds ₹1 lakh, your landlord’s PAN is also required. Even if you don’t submit receipts to your employer (and TDS is deducted), you can still claim the exemption while filing your ITR — but keep the receipts as documentation.

The exemption is still capped at actual HRA received (Condition 1). Paying more rent than your HRA does not increase the exemption beyond the HRA amount — the minimum of all three conditions applies. However, the excess rent paid (beyond HRA) does not give any additional tax benefit under HRA rules, though it may factor into 80GG deduction if you do not receive HRA at all.