HRA Calculator

What is HRA?

House Rent Allowance (HRA) is a component of salary paid by the employer towards an employee's house rent expenses. Under Section 10(13A) read with Rule 2A, a portion of this allowance is exempt from tax if the employee stays in rented accommodation and meets the prescribed conditions.

The exempt amount is calculated based on the basic salary, dearness allowance considered for retirement benefits, HRA received, rent paid, and whether the city is a metro or non-metro. HRA exemption is available only under the old tax regime — under the new tax regime, the full HRA received is taxable.

HRA under the old and new tax regime

Under the old tax regime, HRA exemption under Section 10(13A) reduces taxable salary to the extent of the exempt amount.

Under the new tax regime, HRA exemption is not available and the full HRA is taxable. The new regime offers lower slab rates and a higher standard deduction in place of most exemptions.

How is HRA exemption calculated

For salaried employees covered by Section 10(13A), the exempt HRA is the lowest of:

• Actual HRA received from your employer

• Rent paid minus 10% of salary (Basic Salary + DA Received)

• 50% of salary if you live in a metro city (Delhi, Mumbai, Kolkata, Chennai), or 40% for non-metros

Any HRA received above this amount becomes taxable and must be reported as part of your salary income in the ITR. If you do not receive HRA but still pay rent, the deduction under Section 80GG is available, subject to limits and conditions, on filing Form 10BA.

Conditions for claiming HRA exemption

HRA exemption can be claimed only if all of the following conditions are met:

• The employee is salaried and HRA forms part of the salary structure

• The employee resides in rented accommodation and actually pays rent

• Rent paid exceeds 10% of salary (Basic Salary + DA for this calculation)

Proof of rent payment must be maintained — rent agreement, rent receipts with the landlord's name, and PAN of the landlord if annual rent exceeds ₹1 lakh. If rent is paid to parents, HRA can be claimed provided the parents are the legal owners of the property and a genuine rental agreement and bank transfers exist as evidence.

How to use the HRA calculator?

Once these values are added, the calculator automatically applies the three-condition check for HRA exemption and instantly shows exempt HRA, taxable HRA and estimated tax saving under the old tax regime.

Applying the three conditions:

• Actual HRA received: ₹3,60,000

• Rent paid minus 10% of salary: ₹4,00,000 − ₹1,20,000 = ₹2,80,000

• 40% of salary (non-metro): ₹4,80,000

The lowest of the three is ₹2,80,000, which is the exempt HRA.