HRA Exemption Calculator
Enter your salary, HRA and rent, and see how much of the allowance escapes tax under the old regime's least-of-three rule, and exactly which limit is holding your exemption down.
Of the ₹3,00,000 HRA you receive this year, the tax-exempt portion is
₹1,80,000
The least-of-three test
| Actual HRA received | ₹3,00,000 |
| Rent paid − 10% of basic + DALeast | ₹1,80,000 |
| 50% of basic + DA (metro) | ₹3,00,000 |
| Exempt HRA (the least of the three) | ₹1,80,000 |
| Taxable HRA (added to your salary income) | ₹1,20,000 |
Old regime only; the new regime taxes the full allowance. Assumes the same basic, HRA and rent every month; if anything changed mid-year, run each stretch separately. See every assumption. Curious what the exemption does to your total tax? Feed it into the income tax calculator.
How the HRA exemption works
The least-of-three rule: Your exemption is the smallest of three figures: the HRA you actually receive, your rent minus 10% of basic + DA, and 50% (metro) or 40% (non-metro) of basic + DA. Whatever HRA is left over after the exemption gets taxed as ordinary salary. This is the test that lived in Section 10(13A) and Rule 2A of the old law, carried into the Income-tax Act 2025.
Actual HRA received: The obvious ceiling, since the exemption can never be more than the allowance itself. If your rent and salary would support a bigger exemption, the extra headroom is simply wasted; some people restructure their pay so more of it arrives as HRA.
Rent minus 10% of basic + DA: The law assumes the first 10% of your basic pay is what you'd spend on housing anyway, so only rent above that line earns the exemption. Pay ₹20,000 a month in rent on a ₹50,000 basic and only ₹15,000 of it counts.
The metro percentage: 50% of basic + DA if you rent in Delhi, Mumbai, Kolkata or Chennai; 40% everywhere else. The metro list has never been expanded. Bengaluru, Hyderabad, Pune, Gurugram and Noida all sit at 40%, however big their rents have grown.
Old regime only: Choose the new regime and this whole computation disappears; your entire HRA is taxable there. If HRA is your biggest deduction, that single fact can flip which regime is cheaper for you.
Paying more than ₹1 lakh a year in rent? Your employer can't allow the exemption in your TDS without your landlord's PAN. It goes on the Form 12BB declaration you sign each year. And if your monthly rent crosses ₹50,000, you may need to deduct 2% TDS as a tenant before paying the landlord. Sort both out early; neither can be fixed retroactively in March.
This calculator assumes:
- You're a salaried employee claiming under the old regime, and HRA is a named component of your pay.
- The same basic, DA, HRA and rent apply every month. If any of them changed mid-year, the test runs separately for each stretch: compute each period on its own and add the results.
- “Basic + DA” counts dearness allowance only if it forms part of your retirement benefits; commission earned as a fixed percentage of turnover also counts.
- You live in the rented home and actually pay the rent. There's no exemption for living in your own house or in employer-provided accommodation.
- Metro means Delhi, Mumbai, Kolkata and Chennai only; every other city takes the 40% cap.
HRA exemption FAQs
Can I claim the HRA exemption under the new regime?
No. The exemption belongs to the old regime only; the new regime taxes your full HRA as salary. For many renters HRA is the single biggest deduction they have, so it often decides which regime wins. Run both through our income tax calculator before you choose.
Can I pay rent to my parents and claim HRA?
Yes, if the arrangement is genuine: they own the house, you actually transfer the rent (bank transfer beats cash), and they report it as rental income in their returns. Keep a rent agreement and receipts. Rent paid to a spouse, by contrast, sits on much shakier ground and has been disallowed in several cases.
What if my employer doesn't pay HRA at all?
You can't use this exemption, but the old regime offers a fallback deduction for rent paid (the old Section 80GG), capped at the least of ₹5,000 a month, 25% of your adjusted total income, or rent paid minus 10% of that income. It requires that you, your spouse or minor child own no home in the place where you live and work.
Do I need rent receipts and my landlord's PAN?
Keep rent receipts or bank statements plus the rent agreement. Your employer needs them to allow the exemption in your TDS, and the tax department can ask for them later. If your annual rent tops ₹1,00,000 you must give your employer the landlord's PAN, and if your monthly rent tops ₹50,000 you may also need to deduct 2% TDS as a tenant before paying it.