HRA Exemption Calculator
Calculate your House Rent Allowance (HRA) exemption under Section 10(13A)
HRA Exemption Summary
HRA Exemption Breakdown
| Criteria | Amount (₹) |
|---|---|
| Actual HRA Received | ₹0 |
| Rent Paid - 10% of Salary | ₹0 |
| % of Salary (Metro/Non-Metro) | ₹0 |
| HRA Exemption (Minimum) | ₹0 |
If you are a salaried individual living in a rented house, the House Rent Allowance (HRA) component of your salary can offer significant tax savings. However, calculating the exact exempt amount can be confusing. Our HRA Exemption Calculator is a powerful tool designed to help you accurately determine your HRA exemption under Section 10(13A) of the Income Tax Act.
This guide will walk you through how to use the calculator and explain the rules governing HRA, empowering you to plan your taxes effectively and maximize your savings.
Author’s Note: This calculator provides an estimate based on the data you enter and current tax laws. It is intended for informational purposes only and should not be considered as legal or tax advice. Tax laws are subject to change. It is always recommended to consult with a qualified chartered accountant or tax professional for personalized advice.
What is HRA and How is the Exemption Calculated?
House Rent Allowance (HRA) is an allowance paid by an employer to an employee to cover the cost of living in rented accommodation. The entire HRA amount you receive is not always tax-free. The portion that is exempt from tax is calculated as the minimum of the following three amounts:
- The actual HRA received from your employer.
- The actual rent paid annually minus 10% of your annual basic salary (plus Dearness Allowance, if applicable).
- 50% of your basic salary (plus DA) if you live in a metro city (like Delhi, Mumbai, Kolkata, or Chennai), or 40% if you live in a non-metro city.
The lowest value among these three calculations is the amount you can claim as an HRA exemption. Any amount of HRA received over and above this exemption is considered taxable HRA and is added to your total income.
How to Use the HRA Exemption Calculator
Our calculator simplifies this complex calculation. Follow these steps to get a clear projection:
- Enter Your Salary Details: Input your annual Basic Salary and Dearness Allowance (DA), if it forms a part of your salary for retirement benefits.
- Enter HRA and Rent Paid: Provide the total HRA received from your employer for the year and the total rent you paid annually.
- Select Your City Type: Choose whether you live in a metro or a non-metro city, as this determines the percentage of salary used in the calculation (50% for metro, 40% for non-metro).
- Calculate Your Exemption: The tool will instantly compute your exempt HRA, your taxable HRA, and even suggest the optimal rent you could pay to maximize your exemption.
Why Use an HRA Exemption Calculator?
- Accurate Tax Planning: Get a precise calculation of your tax liability by knowing the exact HRA amount that will be exempt, helping you plan your finances for the year.
- Maximize Your Savings: The “Optimal Rent” feature is a unique tool that shows you the minimum rent you should be paying to take full advantage of the HRA benefit you receive, ensuring you don’t leave money on the table.
- Simplify Complex Rules: The calculator automates the three-condition formula, saving you from manual calculations and potential errors.
- Make Informed Decisions: Understand how changes in your salary, rent, or location can impact your tax savings, helping you make better financial decisions.
Frequently Asked Questions (FAQs)
Who can claim HRA exemption?
Any salaried individual who receives HRA as a part of their salary and lives in a rented accommodation can claim this exemption. You cannot claim HRA exemption if you live in your own house.
What documents are required to claim HRA exemption?
You need to provide rent receipts to your employer as proof of rent payment. For annual rent payments exceeding ₹1,00,000, it is mandatory to provide the landlord’s PAN.
Can I claim HRA exemption if I live with my parents?
Yes, you can claim HRA exemption while living with your parents, provided you pay them rent and have valid rent receipts. Your parents will need to show this rental income in their income tax returns.
What does “salary” mean for HRA calculation?
For the purpose of HRA calculation, “salary” refers to your Basic Salary. It also includes Dearness Allowance (DA) if it is part of your salary for retirement benefits, and any commission based on a fixed percentage of turnover.