HRA Exemption Calculator: Tax-Free House Rent Allowance

HRA Exemption Calculator: Check How Much of Your HRA Is Tax-Free

The PlanMyReturns HRA Exemption Calculator shows exactly how much of your House Rent Allowance is tax-free and how much is added to your taxable income. Enter your basic salary, HRA received, rent paid, and city type, and you instantly see your exempt amount, your taxable amount, and the precise rule that decided it under Section 10(13A) of the Income Tax Act.

HRA exemption is one of the largest tax breaks available to salaried employees in India. For a renter in a big city, it can shield a meaningful part of annual income from tax. The catch is that most people do not know how much of their HRA actually qualifies, because the exempt amount is never simply the HRA your employer pays.

This tool removes that guesswork and follows the exact Income Tax rules.

What Is HRA (House Rent Allowance)?

House Rent Allowance is a part of your salary that your employer pays to help cover the cost of renting a home. If you live in rented accommodation and receive HRA, a portion of it can be claimed as tax-free under Section 10(13A) of the Income Tax Act, read with Rule 2A of the Income Tax Rules.

If you receive HRA but do not pay rent, the entire HRA becomes fully taxable.

Who Can Claim HRA Exemption?

You can claim HRA exemption only if all of the following are true:

• You are a salaried employee and receive HRA as part of your salary.
• You actually pay rent for the home you live in.
• You have chosen the old tax regime.
• You are not the owner of the property you claim rent on.

HRA exemption is not available under the new tax regime. If you pick the new regime, your full HRA is taxed even if you pay rent. This single point is the most common and most expensive mistake taxpayers make.

If you pay rent but your salary has no HRA component, you cannot use Section 10(13A). You may instead be able to claim a deduction under Section 80GG.

How the HRA Exemption Is Calculated

Under Section 10(13A), your exempt HRA is the lowest of these three amounts:

• Actual HRA received from your employer during the year.
• Rent paid during the year, minus 10% of your salary (Basic plus Dearness Allowance).
• 50% of your salary if you live in a metro city, or 40% of your salary if you live in a non-metro city.

Whichever of these three is smallest becomes your tax-free HRA. Anything left over is added back to your taxable salary.

Here, salary means Basic Salary plus Dearness Allowance (where DA forms part of retirement benefits), plus any commission based on a fixed percentage of turnover. It does not mean your gross or total salary.

HRA Calculation Formula in Simple Words

Exempt HRA equals the minimum of:

• A: Actual HRA received
• B: Rent paid, minus 10% of (Basic plus DA)
• C: 50% of (Basic plus DA) for metro, or 40% for non-metro

The PlanMyReturns calculator computes all three values for you, then highlights the winning rule so you can see exactly why your exemption came out the way it did.

Metro vs Non-Metro Cities for HRA

The city you live in decides whether 50% or 40% of your salary is used in the third rule above.

• Metro cities (50% of salary): For many years this list covered only Delhi, Mumbai, Kolkata, and Chennai.
• Non-metro cities (40% of salary): Every other city.

An important update: as part of Budget 2026, the 50% metro list has been reported to expand from FY 2026-27 to also include Bengaluru, Hyderabad, Pune, and Ahmedabad. This means residents of these four cities may now qualify for the higher 50% limit. Because this is a recent change, confirm your city’s status with the Income Tax Department or your employer before filing. If you live in one of the newly added cities, select Metro in the calculator to apply the 50% limit.

A Worked HRA Example

Suppose you live in a metro city with these annual figures:

• Basic Salary plus DA: ₹6,00,000
• HRA received: ₹3,00,000
• Rent paid: ₹3,60,000

The three rules work out as:

• Actual HRA received: ₹3,00,000
• Rent minus 10% of salary: ₹3,60,000 minus ₹60,000, which is ₹3,00,000
• 50% of salary: ₹3,00,000

The lowest value is ₹3,00,000, so your entire HRA of ₹3,00,000 is exempt and your taxable HRA is zero. The calculator shows this breakdown instantly, along with the deciding rule.

What This HRA Calculator Shows You

Every time you calculate, the tool displays:

• Your total HRA received for the year.
• The exact amount that is exempt from tax.
• The taxable portion added to your income.
• The deciding rule, so you understand which of the three limits applied.
• A full comparison table of all three rules, with the winning row highlighted.
• Key takeaways that translate the numbers into plain guidance.

Features of the PlanMyReturns HRA Calculator

This calculator is built to be faster and more transparent than a simple result box:

• Metro and non-metro toggle that applies the correct 50% or 40% limit automatically.
• Quick Examples for common salary and rent combinations, so you can test a scenario in one click.
• Deciding rule display that names the exact rule that set your exemption.
• Share Plan link that lets you send a prefilled calculation to family or your accountant.
• Share Image to save your result as a clean image for records.
• Download CSV to keep or reuse your figures in a spreadsheet.
• Privacy-first design. Every calculation runs inside your browser. Nothing is uploaded, stored, or shared, and no sign-up is needed.

How to Use the HRA Exemption Calculator

• Select whether you live in a metro or non-metro city.
• Enter your monthly Basic Salary plus DA.
• Enter your monthly HRA received.
• Enter your monthly rent paid.
• Read your exempt amount, taxable amount, and deciding rule.

You can also load a Quick Example, reset the inputs to test new scenarios, or share your result using the buttons on the result card.

HRA in the Old vs New Tax Regime

HRA exemption is only available in the old regime, so the choice of regime matters a great deal for renters.

• Old Tax Regime: HRA exemption allowed, along with deductions like 80C and home loan interest.
• New Tax Regime: HRA exemption not allowed, and most deductions removed, but slab rates are lower.

As a rough guide, if your combined deductions such as HRA, 80C, 80D, and home loan interest are large, the old regime often results in lower tax. Run both scenarios for your own numbers before you inform your employer, because your regime choice is generally locked for the financial year once declared.

Can You Claim HRA and a Home Loan Together?

Yes, in many cases. If you own a house in one city but live and pay rent in another, or your owned home is genuinely let out or not reasonably accessible, you may claim HRA exemption under Section 10(13A) and home loan interest under Section 24(b) at the same time. Keep clear documentation, since overlapping claims can attract scrutiny.

Documents You Need to Claim HRA

• Monthly rent receipts signed by the landlord.
• A rent agreement showing the rent amount and period.
• Your landlord’s PAN, which is mandatory if your annual rent exceeds ₹1,00,000. If the landlord has no PAN, a signed self-declaration is required, as per CBDT Circular No. 8/2013.
• Form 12BB submitted to your employer during the year so that TDS is calculated correctly.

Common Mistakes to Avoid

• Claiming HRA under the new tax regime, where it is disallowed.
• Using gross salary instead of Basic plus DA.
• Forgetting to subtract 10% of salary from rent in the second rule.
• Paying rent to parents without a real arrangement or without them declaring it as income.
• Missing the landlord PAN requirement when annual rent crosses ₹1,00,000.

The calculator is designed to steer you away from these errors by applying the correct salary base and city limit for you.

Frequently Asked Questions