Calculate Your HRA Exemption
HRA Exempt
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Taxable HRA
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Tax Saved (est.)
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HRA Exemption Breakdown
What is HRA (House Rent Allowance)?
House Rent Allowance (HRA) is a component of salary paid by employers to employees to meet rental expenses. Under Section 10(13A) of the Income Tax Act, a portion of HRA is exempt from tax if you live in rented accommodation.
HRA Exemption Rules
The HRA exemption is the minimum of these three amounts:
- Actual HRA received from your employer
- 50% of (Basic + DA) for metro cities, or 40% of (Basic + DA) for non-metro cities
- Actual rent paid minus 10% of (Basic + DA)
Metro cities for HRA purposes are: Delhi, Mumbai, Chennai, and Kolkata. All other cities follow the 40% rule.
HRA Calculation Formula
HRA Exempt = MIN(Actual HRA, 50%/40% of Salary, Rent - 10% of Salary)
Where Salary = Basic + DA (Dearness Allowance forming part of salary)
Example Calculation
For a salaried employee in Mumbai:
- Basic + DA = ₹6,00,000/year
- HRA received = ₹2,40,000/year
- Rent paid = ₹15,000/month (₹1,80,000/year)
Calculation:
- Actual HRA = ₹2,40,000
- 50% of salary = ₹3,00,000 (metro)
- Rent - 10% of salary = ₹1,80,000 - ₹60,000 = ₹1,20,000
HRA Exempt = ₹1,20,000 (minimum of the three). Taxable HRA = ₹2,40,000 - ₹1,20,000 = ₹1,20,000.
Tips to Maximize HRA Tax Benefit
- Restructure your salary: Request a higher HRA component from your employer. A higher HRA with proportionally higher rent payments can increase exemption.
- Pay rent to parents: If you live with your parents, you can pay them rent and claim HRA exemption. Ensure the rent is credited to their bank account and they declare it as income.
- Keep rent receipts: For HRA above ₹3,000/month, rent receipts are required. For annual rent above ₹1,00,000, landlord's PAN is mandatory.
- Section 80GG alternative: If you don't receive HRA but pay rent, you can claim up to ₹5,000/month under Section 80GG.
- Old regime only: HRA exemption is not available under the new tax regime. Compare both regimes before choosing.
Related Calculators
Frequently Asked Questions
HRA exemption is the minimum of three amounts: (1) Actual HRA received from employer, (2) 50% of basic salary + DA for metro cities or 40% for non-metro, (3) Actual rent paid minus 10% of basic salary + DA. You get the lowest of these three as tax-exempt.
Only four cities count as metro for HRA purposes: Delhi, Mumbai, Chennai, and Kolkata. All other cities, including Bangalore, Hyderabad, Pune, etc., are classified as non-metro and get the 40% rate instead of 50%.
Yes, you can claim HRA exemption even if you own a house, provided you live in a rented accommodation. For example, if your house is in a different city or you've let it out, you can still claim HRA for the rented house you live in. You can also claim both HRA and home loan benefits simultaneously.
Yes, you can pay rent to your parents and claim HRA exemption. Ensure: (1) there's a rental agreement, (2) rent is transferred via bank, (3) your parent declares the rental income in their ITR. This is a legitimate tax-saving method widely used in India.
No. HRA exemption under Section 10(13A) is only available under the old tax regime. If you choose the new tax regime, you cannot claim HRA exemption. Compare both regimes to see which saves more tax overall.
You need: (1) Rent receipts for rent above ₹3,000/month, (2) Landlord's PAN if annual rent exceeds ₹1,00,000, (3) Rental agreement (recommended), (4) Bank transfer proof of rent payments. Keep these for at least 6 years after filing.