HRA Exemption Calculator (Section 10(13A), Rule 2A)
House Rent Allowance is one of the biggest tax savers for salaried people who live in rented accommodation — but only under the old tax regime. The exempt portion is not a flat percentage; it is the least of three amounts, and this calculator works out all three for you on a monthly and annual basis, then shows the taxable balance and the tax saved at your slab.
The three-limb formula
- (a) Actual HRA received from the employer
- (b) Rent paid minus 10% of salary
- (c) 50% of salary if you live in Delhi, Mumbai, Kolkata or Chennai; 40% elsewhere
"Salary" here means Basic pay plus Dearness Allowance (if it forms part of retirement benefits) plus commission earned as a fixed percentage of turnover. Other allowances are ignored.
Worked example
Basic ₹40,000 per month, HRA ₹16,000, rent ₹15,000 in Jaipur (non-metro), paid for 12 months.
- (a) Actual HRA = 16,000 × 12 = ₹1,92,000
- (b) Rent − 10% of salary = 1,80,000 − 48,000 = ₹1,32,000
- (c) 40% of salary = ₹1,92,000
Exempt HRA = ₹1,32,000; taxable HRA = ₹60,000. At the 20% slab (plus cess) the exemption saves about ₹27,500 in tax.
Practical points
- Compute the exemption separately for any period in which salary, HRA, rent or city changed.
- Rent above ₹1,00,000 a year requires the landlord's PAN; rent above ₹50,000 a month requires TDS u/s 194-IB at 2%.
- You can pay rent to parents (not spouse) if the house is theirs — they must declare it as income.
- Home-loan interest u/s 24(b) and HRA can be claimed together if you genuinely live in rented premises in a different city or location.
- If you receive no HRA but pay rent, claim deduction u/s 80GG instead (max ₹60,000 a year).
Submit rent receipts and the rent agreement to your employer before the investment-proof deadline to have the exemption reflected in Form 16; otherwise claim it while filing the return.
Frequently Asked Questions
Which cities count as metro for 50% HRA?
Only Delhi, Mumbai, Kolkata and Chennai are metro cities under Rule 2A. Bengaluru, Hyderabad, Pune, Ahmedabad, Jaipur etc. are treated as non-metro with the 40% limit.
Can I claim HRA in the new tax regime?
No. HRA exemption u/s 10(13A) is available only under the old regime. If your HRA exemption plus other deductions is large, compare both regimes with the Income Tax Calculator.
Is DA included in salary for HRA?
Dearness Allowance is included only when it forms part of salary for retirement benefits (as in most government and PSU pay structures). Fixed commission as a percentage of turnover is also included.
Can I claim HRA if I pay rent to my parents?
Yes, provided the property belongs to them, rent is actually paid (preferably by bank transfer) and they report the rental income in their return. Rent to a spouse is generally not accepted.
Disclaimer: This tool is for general information and estimation only. Tax rates and rules change — verify with official sources or a professional before acting. Read full disclaimer.