HRA Calculator

What Is HRA Exemption Under Section 10(13A)?

The exemption is calculated monthly and applies only if you actually live in rented accommodation and pay rent. The amount that remains after the exemption (taxable HRA) is added to your gross salary and taxed at your applicable slab rate. For FY 2026-27, salaried employees opting for the old tax regime can claim this benefit.

Per Income Tax Department Rule 2A, proper documentation, including rent receipts and landlord PAN where required, is essential to claim HRA exemption during tax filing.

It is worth separating two different numbers here. The HRA you actually receive is set by your employer's salary policy, or for central government employees by the 7th Pay Commission's city classification (24 per cent, 16 per cent, or 8 per cent of basic plus DA). The HRA that is exempt from tax is a separate calculation under Section 10(13A), the one this calculator performs, and it is very often lower than what you receive.

Conditions for Claiming HRA Exemption

All of the following must be true at the same time. Missing any one of them means the exemption does not apply for that period, regardless of how the three-part formula works out.

• You must be a salaried employee. Section 10(13A) exempts a salary component, so it does not apply to freelancers, consultants, or business owners, who use Section 80GG instead.
• HRA must actually be a named component of your salary structure. If your CTC has no HRA line, there is nothing to exempt, again pointing you to Section 80GG.
• You must live in rented accommodation and genuinely pay rent for it, ideally traceable through a bank transfer.
• You must have opted for the old tax regime for that financial year. The new regime does not allow this exemption at all.
• You cannot pay rent to your spouse and claim HRA on it, since the law does not recognise that as a genuine landlord-tenant arrangement.
• You cannot claim HRA for a property you own and live in yourself, even if you also have a home loan on it.

HRA Exemption Formula

Worked example: Basic salary Rs 50,000 per month, HRA received Rs 20,000, rent paid Rs 18,000 in a metro city. A = Rs 20,000. B = Rs 18,000 minus Rs 5,000 (10% of basic) = Rs 13,000. C = 50% of Rs 50,000 = Rs 25,000. Exemption = min(Rs 20,000, Rs 13,000, Rs 25,000) = Rs 13,000 per month. Taxable HRA = Rs 20,000 minus Rs 13,000 = Rs 7,000.

"Salary" for this formula means basic salary plus Dearness Allowance, but only if your DA counts towards retirement benefits, which mainly applies to government and PSU employees. Most private-sector employees have no separate DA component, so basic salary alone is the right figure. Enter your DA in More Settings only if it applies to you.

Worked example with DA: A government employee has basic salary Rs 40,000 and DA of Rs 20,000 a month, so salary for HRA purposes is Rs 60,000. They receive HRA of Rs 14,400 (the 7th Pay Commission's X-class rate of 24% of basic plus DA) and pay rent of Rs 25,000 in a metro city. A = Rs 14,400. B = Rs 25,000 minus Rs 6,000 (10% of Rs 60,000) = Rs 19,000. C = 50% of Rs 60,000 = Rs 30,000. Exemption = min(Rs 14,400, Rs 19,000, Rs 30,000) = Rs 14,400, the full HRA received, since A is the smallest of the three here.

HRA Exemption Formula in Excel

Since the exemption is the minimum of three values, a single Excel MIN() formula computes it directly, with an IF() for the metro/non-metro ceiling.

Wrap the result in MAX(0, ...) if you want the sheet to handle a case where rent is lower than 10% of salary, since B can otherwise go negative.

Metro vs Non-Metro HRA Exemption

The city classification matters because the third component of the HRA formula changes. Four cities are classified as metro for HRA purposes: Delhi, Mumbai, Chennai, and Kolkata. For these cities, the ceiling is 50 per cent of basic salary. For all other Indian cities and towns, the ceiling is 40 per cent of basic salary.

If you live in a metro city but work for a company headquartered elsewhere, your HRA ceiling depends on the city where you actually reside and pay rent, not where your employer is based. Bangalore, Hyderabad, Pune, and Ahmedabad are all classified as non-metro for HRA exemption, even though they are major metropolitan areas.

Does Gurgaon, Noida, or Navi Mumbai Count as Metro for HRA?

No. The Section 10(13A) metro classification is tied to the municipal limits of the four named cities themselves, Delhi, Mumbai, Chennai, and Kolkata, not the wider metropolitan region around them.

Gurugram (Gurgaon), Noida, Ghaziabad, and Faridabad are all part of the National Capital Region and sit right next to Delhi, but none of them is Delhi for this formula, so they use the 40 per cent non-metro ceiling. The same applies to Navi Mumbai, Thane, and Kalyan around Mumbai, and to satellite areas around Chennai and Kolkata.

This catches out a lot of employees who work for a Delhi-headquartered or Mumbai-headquartered company but actually live and pay rent in a satellite town. What matters for the exemption ceiling is the city where you reside and pay rent, and only the exact municipal area of the four named cities qualifies for the higher 50 per cent ceiling.

HRA for Government Employees: X, Y, Z City Classification

Central government employees receive HRA under a completely separate classification system from the metro/non-metro exemption ceiling covered above, and confusing the two is a common mistake.

This X/Y/Z system decides how much HRA a government employee receives, it is not the exemption formula. A government employee in Bengaluru is in an X-class city and receives 24 per cent HRA, but Bengaluru is still non-metro for the Section 10(13A) exemption ceiling, so component C in the formula above still uses 40 per cent, not 50 per cent. The two systems only agree on Delhi, Mumbai, Kolkata, and Chennai, which are X-class under both.

HRA Calculation Example: Metro vs Non-Metro

Consider an employee with basic salary of Rs 60,000 per month and HRA of Rs 25,000 per month, paying rent of Rs 22,000 per month.

In this example, the result is the same because the rent minus 10 per cent of basic (Rs 16,000) is the lowest in both cases. The metro ceiling only matters when rent is high relative to basic salary. Use the Old vs New Tax Regime Calculator to see whether opting for the old regime to claim HRA is worthwhile for your situation.

Which Part of the Formula Actually Applies to You?

Only one of the three values in the formula ever determines your exemption: whichever is smallest. Most employees never notice this because their salary structure keeps one component consistently lowest, but the binding constraint can be any of the three depending on your numbers.

In practice, most salaried employees in metro cities with company-set HRA around 40-50 per cent of basic find that B, rent minus 10 per cent of salary, is the binding constraint, which is why increasing your declared rent (up to what you actually pay) is usually the most direct way to raise your exemption.

HRA Exemption Reference Table by Basic Salary

The table below shows the exemption at common basic salary levels, assuming HRA of 50 per cent of basic and rent of 55 per cent of basic, a structure high enough that the metro and non-metro ceilings genuinely differ. Enter your own numbers in the calculator above for an exact figure.

At this rent level, the metro exemption is consistently 5 per cent of basic salary higher than non-metro, because rent minus 10 per cent of salary (45 per cent of basic here) sits between the two ceilings: below the 50 per cent metro cap but above the 40 per cent non-metro cap, so metro exemption is capped by B while non-metro is capped by its lower ceiling. At lower rent-to-basic ratios, as in the earlier worked example, city classification often makes no difference at all.

How Much Does HRA Actually Save You in Tax?

The exemption amount itself is not the tax saving. The actual rupee saving is the exemption multiplied by your marginal tax rate, so the same exemption is worth very different amounts to different earners.

On a larger exemption, the gap widens further: the Rs 45,000-a-month metro exemption from the Rs 1,00,000-basic row of the reference table above, Rs 5,40,000 a year, saves about ₹1,12,320 at the 20 per cent slab but about ₹1,68,480 at the 30 per cent slab, a difference of over ₹56,160 for an identical exemption amount. This is also why the old-versus-new regime decision matters more for higher earners with a large HRA component: the exemption is worth more to them in absolute rupees even at the same percentage.

Rent Receipts and Landlord PAN Requirements

To claim HRA exemption, you need proper documentation. If your annual rent is Rs 1,00,000 or less, you need rent receipts showing the landlord name, address, amount, and period of rent. If the annual rent exceeds Rs 1,00,000, you must provide the landlord PAN in addition to rent receipts. The landlord must also declare the rental income in their income tax return.

Without the landlord PAN, your employer may deduct TDS at a higher rate on the HRA component, and the income tax department may disallow the HRA exemption if the PAN requirement is not met. It is advisable to obtain the landlord PAN at the start of the tenancy to avoid last-minute issues during tax filing.

Documents Required for HRA Exemption

Beyond the rent receipts and landlord PAN already covered, keep these on hand for a smooth claim, whether your employer asks for them during the year or the income tax department asks during assessment.

• Rent agreement: a signed agreement covering the claim period, ideally registered if the tenancy runs 12 months or more.
• Rent receipts: one for each month claimed, or a consolidated receipt covering the full period, signed by the landlord.
• Landlord PAN: mandatory once annual rent crosses Rs 1,00,000. If the landlord has no PAN, a signed declaration from them is required instead.
• Proof of payment: bank transfer records, UPI receipts, or cheque copies showing rent actually moving from you to the landlord. Cash payments are harder to substantiate if questioned.
• Form 12BB: the declaration you submit to your employer at the start of the financial year (or when asked) listing your HRA claim along with other deduction declarations.

Keep copies even if your employer never explicitly requests them. If your employer's payroll team does not adjust HRA in your TDS for any reason, you can still submit these documents yourself while filing your return.

HRA Exemption When Salary, Rent, or City Changes Mid-Year

HRA exemption is not computed once a year on annual totals. It must be worked out separately for each period in which your basic salary, HRA, rent, or city of residence stays constant, then the period-wise amounts are added together. A single annual calculation can understate or overstate your real exemption whenever any of these change during the financial year.

Worked example: An employee spends April to September in Pune (non-metro) on a basic salary of Rs 40,000, HRA of Rs 16,000, and rent of Rs 15,000 a month. In October, they transfer to Mumbai (metro), with basic rising to Rs 45,000, HRA to Rs 22,500, and rent to Rs 28,000.

Total exemption for the year is Rs 66,000 plus Rs 1,35,000, or Rs 2,01,000. There is no single "annual basic" or "annual rent" figure you could plug into the formula once and get this same answer, since the Pune months use the 40 per cent non-metro ceiling and the Mumbai months use the 50 per cent metro ceiling. Run each stable period through the calculator above separately and add the results.

HRA Under the Old Tax Regime

HRA exemption under Section 10(13A) is available only under the old tax regime. The new tax regime, which has been the default since FY 2023-24, does not allow this exemption. If you want to claim HRA benefit, you must explicitly opt for the old regime when filing your ITR.

For salaried employees with significant HRA components, the old regime often results in lower total tax despite the higher slab rates, because the HRA exemption can reduce taxable income by thousands per month. This is especially true for employees in metro cities paying high rent relative to their basic salary.

HRA When You Also Have a Home Loan

You can claim HRA exemption and home loan interest deduction under Section 24(b) in the same year, as long as they relate to different situations. The common case is working in a city other than the one where you own a home loan property.

Worked example: An employee works in Bengaluru (non-metro) on a basic salary of Rs 60,000 a month, receives HRA of Rs 24,000, and pays rent of Rs 20,000 for a rented flat near the office. HRA exemption = min(Rs 24,000, Rs 20,000 minus Rs 6,000, Rs 24,000) = Rs 14,000 a month, or Rs 1,68,000 a year. Separately, they pay Rs 2,00,000 a year in interest on a home loan for a flat they own in another city, which is vacant or let out. Both the HRA exemption and the full Section 24(b) interest deduction can be claimed in the same return.

The one situation where this does not work is claiming HRA for rent paid on the very same property your home loan financed. If you live in your own home loan property, you can claim the interest deduction, but not HRA, since you are not paying rent to anyone. Use the Mortgage Calculator to work out your home loan EMI and interest for the year.

Can You Pay Rent to Parents and Claim HRA?

Yes, this is allowed, provided the arrangement is genuine and properly documented. The restriction in the conditions above is specifically on paying rent to a spouse, not to parents.

• The property must actually belong to the parent, not to you or your spouse. You cannot pay rent to a parent for a house that is legally yours.
• Rent must genuinely move from you to your parent, ideally by bank transfer, not just exist as paperwork with no real payment.
• Your parent must declare the rent received as income from house property in their own tax return. They can claim a flat 30 per cent standard deduction against it, and deduct any home loan interest on that property, which often keeps their incremental tax low or nil.
• A simple rent agreement between you and your parent, plus the same rent receipts and landlord PAN rules covered above, still apply.

This is a commonly used, legitimate structure when an employee lives with parents who own the home: the employee claims HRA exemption on genuine rent paid, and the parent reports modest rental income that is often largely offset by the standard deduction and any home loan interest on the property. It does not work if the parents themselves are dependent on the employee and the "rent" is really just household money changing hands informally.

HRA vs Section 80GG: What Is the Difference?

Section 80GG is a deduction available to individuals who live in rented accommodation but do not receive HRA from their employer. This applies to self-employed professionals, freelancers, and employees whose salary structure does not include an HRA component. The deduction under Section 80GG is limited to the minimum of: rent paid minus 10 per cent of total income, Rs 5,000 per month, or 25 per cent of total income.

The key difference is that HRA exemption under Section 10(13A) is available only to salaried employees who receive HRA, while Section 80GG is available to any individual paying rent regardless of whether they receive HRA. The HRA exemption is also more generous because it is based on actual HRA and basic salary, with no upper cap of Rs 5,000 per month.

Can Self-Employed Individuals and Freelancers Claim HRA?

No, not under Section 10(13A). That exemption is written specifically for a salary component paid by an employer, so it does not exist for anyone without an employer-employee relationship: freelancers, consultants, business owners, and other self-employed professionals.

Section 80GG is the equivalent relief for this group. It works on total income rather than basic salary, and it caps the deduction at Rs 5,000 a month regardless of how high your actual rent is, which is why it is usually far less generous than a genuine HRA exemption would be for an equivalent income and rent.

HRA for NRI Employees

NRI employees earning salary income in India are eligible to claim HRA exemption under Section 10(13A) if they satisfy the conditions: they receive HRA as part of their salary, live in rented accommodation in India, and actually pay rent. The same calculation rules apply with metro and non-metro classifications.

NRIs should be aware that if they claim HRA exemption under the old regime, they forego the lower tax rates of the new regime. Since NRIs often have different income compositions, it is important to compare both regimes before deciding. The multi-currency selector in this calculator converts amounts to your preferred currency for easier understanding.

Common HRA Claim Mistakes

Limitations of This Calculator

Key Takeaways

• HRA exemption is the smallest of three numbers, and for most metro-city employees with company-set HRA around 40-50 per cent of basic, it is rent minus 10 per cent of salary that actually binds, not the HRA you receive or the city ceiling.
• Only Delhi, Mumbai, Chennai, and Kolkata count as metro for the exemption ceiling, a narrower list than the eight X-class cities government employees use for their HRA rate, and narrower still than the wider metropolitan regions (Gurgaon, Noida, Navi Mumbai) people often assume are included.
• The exemption is only available under the old tax regime, so a large HRA claim is one of the main reasons the old regime can still beat the new regime despite its higher slab rates, worth checking on the Old vs New Tax Regime Calculator before assuming the new regime automatically wins.
• Documentation, not the formula, is where most real-world claims fail: a rent agreement, traceable rent payment, and landlord PAN above Rs 1 lakh annual rent are all required regardless of how the arithmetic works out.

How to Use This HRA Calculator

1. Enter basic salary: enter your monthly basic salary as shown in your salary slip. Basic salary is the foundation for the HRA calculation.
2. Enter HRA and rent: enter the monthly HRA amount your employer pays and the actual monthly rent you pay for your accommodation.
3. Select city type: choose between metro (Delhi, Mumbai, Chennai, Kolkata) or non-metro. The calculator adjusts the ceiling automatically. Click More settings only if your Dearness Allowance counts towards retirement benefits.
4. See the breakdown: the result panel shows the three components of the formula, the exempt amount, taxable HRA, and annual tax saving estimate.

Click any value to type a precise number. Use the currency selector to view amounts in your preferred currency. The annual tax saving shown is an estimate based on your marginal tax rate.

HRA Glossary: Key Terms Explained

Frequently Asked Questions

Disclaimer: All calculations on this page are indicative only. HRA exemption depends on your actual salary structure, rent paid, city classification, and compliance with documentation requirements under the Income Tax Act. This calculator is for educational and planning purposes only and does not constitute financial advice. Consult a SEBI-registered investment adviser or a qualified chartered accountant for personalised tax planning.