HRA Calculator — House Rent Allowance Exemption

What is HRA?

House Rent Allowance (HRA) is a salary component paid by employers to cover rental housing costs. Under Section 10(13A) of the Income Tax Act, a portion of your HRA is exempt from tax — making it one of the biggest tax-saving allowances for salaried Indians living on rent.

HRA Exemption Formula

The exempt HRA is the minimum of these three:

1. Actual HRA received from employer
2. 50% of (Basic + DA) for metro cities, 40% for non-metro
3. Rent paid minus 10% of (Basic + DA)

Whichever is the lowest of the three becomes the tax-free portion. The remaining HRA is added to your taxable income.

Example Calculation

Suppose your monthly Basic = ₹50,000, HRA received = ₹20,000, and you pay ₹18,000 rent in Mumbai (metro):

• Actual HRA: ₹2,40,000
• 50% of Basic: ₹3,00,000
• Rent − 10% Basic: ₹2,16,000 − ₹60,000 = ₹1,56,000

The exempt HRA is ₹1,56,000 — the lowest of the three.

HRA in Metro vs Non-Metro

Only Delhi, Mumbai, Kolkata and Chennai count as metro under the HRA rules. Residents of these cities get 50% of basic+DA in the second leg of the formula; everyone else gets 40%, which usually results in a smaller exemption.

Documents Required

• Monthly rent receipts signed by your landlord
• Landlord's PAN if annual rent exceeds ₹1,00,000
• Rent agreement (recommended)

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