How is HRA Exemption Calculated?
House Rent Allowance (HRA) is a component of your salary that helps cover the cost of rented accommodation. Under Section 10(13A) of the Income Tax Act, a part of the HRA you receive is exempt from tax, provided you actually pay rent. The exempt amount is the lowest of three values: (1) Actual HRA received from your employer, (2) 50% of your Basic salary if you live in a metro city (Delhi, Mumbai, Chennai, or Kolkata) or 40% for non-metro cities, and (3) Rent paid minus 10% of your Basic salary.
The HRA exemption applies only if you are a salaried individual paying rent for accommodation. Self-employed individuals and those who live in their own home are not eligible for this exemption. If your annual rent exceeds ₹1 lakh, you must provide your landlord's PAN to claim the exemption.
Under the new tax regime introduced in Budget 2023, HRA exemption is not available — it is applicable only under the old (existing) tax regime. If you are evaluating which regime to opt into, compare the tax impact with and without HRA exemption based on your actual rent and salary.
Frequently Asked Questions
What are the three conditions for HRA exemption?
The HRA exemption is the minimum of three values: (1) Actual HRA received from your employer, (2) 50% of basic salary for metro cities (Delhi, Mumbai, Chennai, Kolkata) or 40% for non-metro cities, and (3) Actual rent paid minus 10% of basic salary. The lowest of these three is your tax-exempt HRA.
Can I claim HRA if I live in my own house?
No. HRA exemption is available only when you actually pay rent for accommodation. If you own and live in your home, you cannot claim HRA exemption. However, if you own a house in one city but rent a place in another city (due to work), you can claim both HRA exemption and home loan deductions simultaneously.
Is HRA available under the new tax regime?
No. HRA exemption under Section 10(13A) is available only under the old tax regime. If you opt for the new tax regime, you cannot claim HRA exemption. When deciding between tax regimes, factor in whether your HRA saves more than the lower slab rates offered in the new regime.
Do I need to submit rent receipts to claim HRA?
Employers typically require rent receipts and a rental agreement as proof to approve HRA exemption. If your annual rent exceeds ₹1 lakh (₹8,333/month), you must also provide your landlord's PAN. Without PAN, TDS at 30% must be deducted and deposited on the rental amount.
Related Calculators
This calculator is for educational purposes only and covers the standard HRA exemption formula under the old tax regime. Individual tax outcomes may vary. Consult a qualified tax adviser for personalised advice.
Why this calculator is useful
Calculate your HRA tax exemption under Section 10(13A) of the Income Tax Act. Enter your basic salary, HRA received, rent paid, and city to find out how much HRA is tax-free. This page is designed to help readers understand the financial scenario clearly, compare the numbers, and make better decisions with practical context.
Why this matters
HRA Calculator turns a common financial or planning question into a clear number you can compare, discuss, and act on.
What to review
Use realistic inputs and update assumptions if your situation changes, because even small changes can shift the outcome noticeably.
How to use the result
Treat the calculation as a practical planning guide and verify it with your records or a professional for important decisions.
Quick examples and best practices
- Use realistic inputs: Enter values that match your real income, loan terms, or investment profile so the result feels practical.
- Compare scenarios: Change one variable at a time to see how the result shifts before making a decision.
- Verify major choices: For high-stakes decisions, cross-check the output with documents, spreadsheets, or a qualified professional.
Common questions
What are the three conditions for HRA exemption?
The HRA exemption is the minimum of three values: (1) Actual HRA received from your employer, (2) 50% of basic salary for metro cities (Delhi, Mumbai, Chennai, Kolkata) or 40% for non-metro cities, and (3) Actual rent paid minus 10% of basic salary. The lowest of these three is your tax-exempt HRA.
Can I claim HRA if I live in my own house?
No. HRA exemption is available only when you actually pay rent for accommodation. If you own and live in your home, you cannot claim HRA exemption. However, if you own a house in one city but rent a place in another city (due to work), you can claim both HRA exemption and home loan deductions simultaneously.
Is HRA available under the new tax regime?
No. HRA exemption under Section 10(13A) is available only under the old tax regime. If you opt for the new tax regime, you cannot claim HRA exemption. When deciding between tax regimes, factor in whether your HRA saves more than the lower slab rates offered in the new regime.
Do I need to submit rent receipts to claim HRA?
Employers typically require rent receipts and a rental agreement as proof to approve HRA exemption. If your annual rent exceeds ₹1 lakh (₹8,333/month), you must also provide your landlord's PAN. Without PAN, TDS at 30% must be deducted and deposited on the rental amount.