Find how much of your House Rent Allowance is exempt from income tax. The law allows the least of three amounts, and all three are shown so you can see which one applies to you.
All three statutory amounts are calculated from your salary, HRA and rent.
The smallest of the three is your exempt HRA.
Anything above that is added to your taxable salary.
Only Delhi, Mumbai, Kolkata and Chennai count as metro cities for this purpose.
Exemption: Least of the three below
1: Actual HRA received
2: Rent paid − 10% of (basic + DA)
3: 50% of (basic + DA) for metro, 40% for non-metro
House Rent Allowance is a salary component meant to help pay rent. Under the old tax regime, part or all of it can be exempt from tax if you actually pay rent. The exempt amount is the smallest of three figures set by the rule. This calculator works out all three, shows which one is the smallest, and tells you how much of your HRA is exempt and how much is taxed.
Salaried people living in rented homes use it every year when submitting rent receipts to their employer. It is also useful before signing a lease or accepting a salary structure, since rent and basic pay both affect the exemption. A marketing executive renting a flat in Pune can see how much of his HRA escapes tax and how much is added to taxable salary.
1. Add basic pay and dearness allowance for the year to get salary S. HRA received for the year is H, and rent paid for the year is R.
2. Amount 1 = H, the actual HRA received.
3. Amount 2 = R − 10% of S. If rent is less than 10% of salary, this is zero.
4. Amount 3 = 50% of S if you live in Delhi, Mumbai, Kolkata or Chennai, or 40% of S elsewhere.
5. Exempt HRA = the smallest of amounts 1, 2 and 3.
6. Taxable HRA = H − exempt HRA.
Each of the three limits blocks a different kind of excess. The first ensures you cannot claim more exemption than the HRA you were paid. The second assumes you should bear rent up to 10% of salary yourself, so only rent above that is relieved. The third caps the relief as a share of salary, larger in the four metros where rents are highest. Taking the least of the three gives relief that matches real rent, real HRA and a reasonable share of salary.
For people with modest rent, the second amount is usually the smallest, because rent minus 10% of salary is small. For people with high rent in a non-metro city, the 40% cap often binds. When the employer sets HRA low, the actual HRA becomes the limit. The calculator shows all three so you can see which one is binding. Raising rent helps only if the rent-based amount is the smallest; otherwise it changes nothing.
The HRA exemption is available only under the old regime. Under the new regime, the whole HRA is taxable as part of salary. So the exemption is one of the main reasons tenants with high rent may prefer the old regime. The calculation also covers only the period you actually lived on rent. If you moved into your own home midway through the year, compute the exemption for the rented months separately.
Rahul works in marketing in Pune, a non-metro for this rule. His basic pay plus DA is ₹4,80,000 a year, he receives ₹1,92,000 as HRA, and he pays ₹18,000 a month, or ₹2,16,000 a year, in rent.
Answer: HRA exempt from tax ₹1,68,000; Taxable HRA ₹24,000; Actual HRA received ₹1,92,000
Treating Bengaluru, Hyderabad or Pune as metros. Only Delhi, Mumbai, Kolkata and Chennai count for the 50% limit.
Using CTC or gross salary instead of basic plus DA in the formula.
Claiming the exemption under the new regime.
Using monthly figures for some inputs and yearly figures for others.
Paying rent in cash with no receipts or agreement, which makes the claim hard to support.
Submitting investment and rent proofs to the employer.
Deciding between the old and new regime.
Checking how a new lease changes taxable salary.
Discussing HRA and basic pay levels during salary negotiation.
Can I claim HRA under the new tax rules?
No. The HRA exemption is only available under the old rules. This is one of the main reasons people who pay high rent often still find the old rules cheaper.
Can I claim HRA if I pay rent to my parents?
Yes, provided the arrangement is genuine — your parents must actually own the property and must declare the rent as income in their own return. Keep rent receipts and pay by bank transfer.
Which cities count as metro cities for HRA?
Only Delhi, Mumbai, Kolkata, and Chennai. Bengaluru, Hyderabad, Pune, and all other cities use the 40% limit, even though they are also large cities.
Can I claim both HRA and a home loan deduction?
In some cases, yes — for example, if you own a house in one city but genuinely live on rent in another city for work. Your claim must match your real situation.