π HRA Exemption Calculator
Section 10(13A), least of three.
HRA exempt from tax
Estimates for planning only, not financial advice.
House Rent Allowance exemption under Section 10(13A) is the least of three numbers: actual HRA received, rent paid minus 10% of salary, and 50% of salary in metros (40% elsewhere). With salary of Rs 12,00,000, HRA of Rs 6,00,000, and rent of Rs 7,20,000 in a metro, the three candidates are Rs 6,00,000, Rs 6,00,000, and Rs 6,00,000, so the exemption is Rs 6,00,000 and taxable HRA is Rs 0. A perfect tie, which rarely happens by accident.
How to Use This Calculator
Enter annual basic salary plus dearness allowance, HRA received, and actual rent paid, then pick metro or non-metro. The calculator shows all three tests and the exempt amount.
Enter basic + DA, the salary definition HRA uses.
Enter HRA received and rent actually paid.
Choose city type and read the exemption. For the tax on the rest of your salary, our income tax calculator covers the US side.
The HRA Exemption Formula
Salary here means basic plus dearness allowance only, not total CTC, which is the most common error. Metro means Delhi, Mumbai, Chennai, or Kolkata only; everywhere else, including Bangalore and Hyderabad, is non-metro at 40%. You must actually live in rented accommodation and pay rent; homeowners claiming HRA for a self-occupied house invite scrutiny. Note the new tax regime: HRA exemption is unavailable if you opt for it, which changes the math for many.
Worked Example
Basic + DA Rs 12,00,000, HRA Rs 6,00,000, rent Rs 7,20,000, metro. Test 1: Rs 6,00,000. Test 2: 7,20,000 - 1,20,000 = Rs 6,00,000. Test 3: 50% of 12,00,000 = Rs 6,00,000. Least: Rs 6,00,000, fully exempt. Now the common shortfall: rent of Rs 4,80,000 makes test 2 equal Rs 3,60,000, so only Rs 3,60,000 is exempt and Rs 2,40,000 of HRA is taxable. Rent receipts and the landlord's PAN above Rs 1,00,000 annual rent are the documentation that decides this.
Maximizing the Exemption Honestly
The levers are real rent paid and the salary definition, not creativity. Paying genuine higher rent raises test 2; nothing raises tests 1 and 3 beyond what they are. Fake rent receipts to relatives are the classic evasion the department now data-matches against PAN filings, and the penalties dwarf the savings. If your HRA is small relative to rent, the exemption caps at actual HRA and the excess rent simply goes unrelieved.
My straight advice: claim exactly what the three tests give, keep rent agreements and receipts filed, and compare old versus new regime yearly. The new regime's lower rates often beat old-regime HRA benefits for renters with modest HRA, and the choice is yours every year.
Estimates for planning only, not financial advice.
Frequently Asked Questions
How is HRA exemption calculated?
Least of three: actual HRA received, rent paid minus 10% of basic plus DA, and 50% of basic plus DA in metros (40% elsewhere). Section 10(13A) sets the formula.
What salary counts for HRA?
Basic salary plus dearness allowance only, not total CTC or gross pay. Using full CTC inflates the exemption wrongly and is the most common calculation error.
Which cities are metros for HRA?
Delhi, Mumbai, Chennai, and Kolkata get the 50% limit. Every other city, including Bangalore and Hyderabad, uses 40%. The list has not expanded in decades.
Can I claim HRA in the new tax regime?
No. The new regime disallows HRA exemption along with most deductions. Compare both regimes yearly; the new one's lower slab rates often win for modest-HRA renters.
What documents prove HRA?
Rent agreement, monthly rent receipts, and the landlord's PAN if annual rent exceeds Rs 1,00,000. Employers collect these; the assessing officer can ask again.
Can I pay rent to my parents and claim HRA?
Yes, if it is genuine: a real agreement, actual payments, and the parent declaring the rental income. Fake receipts to family are data-matched and penalized.
What if my rent is less than 10% of salary?
Then test 2 goes negative and is treated as zero, so the exemption is zero. Low rent relative to salary simply yields no exemption; there is no floor benefit.
Is HRA fully exempt ever?
Yes, when actual HRA is the smallest of the three tests, the whole HRA is exempt. Structuring salary with HRA matched to real rent achieves this legitimately.
Can both spouses claim HRA on the same rent?
Yes, if both genuinely pay a share of the rent and each claims only their share. Splitting one rent payment between two claims without actual separate payments is disallowed.
Does HRA need the landlord to be an individual?
No, companies can be landlords too. The PAN requirement above Rs 1,00,000 annual rent applies either way, and the rent agreement should name the actual owner.