HRA exemption calculator

How the calculation works

Your exempt HRA is the least of three amounts, and the calculator above computes all three so you can see which one is binding:

1. Actual HRA received from your employer for the year.
2. Rent paid minus 10% of basic plus DA.
3. 50% of basic plus DA if you live in Delhi, Mumbai, Kolkata or Chennai, or 40% anywhere else.

Whichever is smallest is exempt. The rest of your HRA is added to taxable salary. Knowing which limb binds tells you what would actually change your exemption: if limb 2 binds, paying more rent helps; if limb 3 binds, only a higher basic would.

A worked example

Basic ₹40,000 a month, HRA ₹16,000 a month, rent ₹18,000 a month, living in Mumbai:

The least is ₹1,68,000, so that much is exempt and the remaining ₹24,000 of HRA is taxable. At a 30% slab, the exemption is worth roughly ₹52,000 in tax for the year.

Salary here means basic plus DA, not gross

Both the 10% subtraction and the 50/40% cap apply to basic plus dearness allowance only. Not gross salary, not CTC. Using gross inflates every limb and is the most common arithmetic mistake in HRA claims, usually caught by payroll in February when there is no time left to fix the TDS.

If you are not sure what your basic actually is, it is the first line in the earnings column of your payslip. The guide to reading a salary slip covers the rest of that column.

Only four cities are metros

For HRA, the metro list is Delhi, Mumbai, Kolkata and Chennai. That is the complete list. Bengaluru, Hyderabad, Pune, Gurgaon, Noida, Ahmedabad and every other city is capped at 40%, regardless of what they cost to live in.

What matters is where the rented house is, not where your office is. Living in Gurgaon and working in Delhi makes you a 40% case. The metro vs non-metro guide has the full list and the mid-year move rules.

Old regime only

HRA exemption comes from Section 10(13A), which applies only under the old tax regime. Under the new regime the entire HRA is taxable and this calculation does not apply to you.

Before you spend a February collecting receipts, check which regime actually wins for your income. The income tax calculator runs both side by side, and the regime comparison guide has worked examples at four salary levels.

What to keep

• Rent receipts signed by the landlord, which the rent receipt generator produces for a full year in one PDF.
• The rent agreement, which most employers insist on.
• The landlord's PAN once annual rent crosses ₹1,00,000.
• Bank statements showing rent leaving your account every month. Not always demanded, but the strongest evidence if the claim is ever questioned.

If your salary has no HRA component

Section 10(13A) does not apply, but Section 80GG might. It is a smaller deduction for rent paid, open to people who receive no HRA and to the self-employed, capped at the least of ₹5,000 a month, 25% of total income, or rent minus 10% of total income. It is old regime only, and you must not own a house in the city where you live. Details are in Section 80GG explained.