SIMPLEGENCE

HRA Exemption Calculator

Calculate exactly how much HRA is tax-exempt and how much is taxable

Skip to Calculator ↓

What Is HRA and How Is It Taxed?

House Rent Allowance (HRA) is a component of your salary that your employer pays to meet your house rental expenses. HRA is not fully tax-free — you get an exemption based on the minimum of three conditions, and the rest is added to your taxable income.

HRA is one of the biggest tax-saving tools for salaried employees who live on rent. But you must claim it correctly.

The Three-Condition HRA Rule

Your HRA exemption = the minimum of these three amounts:

HRA Exempt = Minimum of:

Condition 1: Actual HRA received from employer
Condition 2: 50% of Basic+DA (metro) or 40% (non-metro)
Condition 3: Actual rent paid − 10% of Basic+DA
Metro cities = Delhi, Mumbai, Chennai, Kolkata (50% rule applies)
Non-metro = All other cities (40% rule applies)
Basic+DA = Monthly Basic Pay + Dearness Allowance

Example: Mumbai Employee

Monthly Basic + DA ₹50,000
Monthly HRA from employer ₹20,000
Monthly Actual Rent Paid ₹22,000
Condition 1 (Actual HRA) ₹20,000
Condition 2 (50% of ₹50K) ₹25,000
Condition 3 (Rent − 10% of Basic) ₹22,000 − ₹5,000 = ₹17,000
HRA Exempt (minimum of 3) ₹17,000/month
Annual Tax-Exempt HRA ₹2,04,000

Your HRA Exemption Calculator

Basic Pay + Dearness Allowance only
HRA component in your salary slip
Actual rent you pay your landlord
Determines 50% or 40% rule

HRA Exemption Breakdown

Condition 1 — Actual HRA received —
Condition 2 — 50%/40% of Basic+DA —
Condition 3 — Rent − 10% of Basic —
Monthly HRA Exempt (minimum of 3)
—
Annual HRA Exempt —
Annual Taxable HRA —

Paying Rent Above ₹1 Lakh/Year? Submit PAN of Landlord

If your annual rent exceeds ₹1 lakh (₹8,333/month), you must provide your landlord's PAN to your employer to claim HRA exemption. If your landlord doesn't have PAN, get a declaration on letterhead. Failure to provide this will result in TDS deduction on the entire HRA.

HRA in New Tax Regime

HRA exemption is only available under the Old Tax Regime. If you've opted for the New Regime, you cannot claim HRA exemption — the entire HRA received becomes taxable. If you're paying significant rent, this is a major reason to stick with the Old Regime and use our Income Tax Calculator to compare.

Frequently Asked Questions

Yes, you can claim HRA by paying rent to your parents — provided you have a genuine rental agreement and actual bank transfers. Your parents must declare this rent as income in their ITR. You cannot claim HRA if paying rent to your spouse, as they share household expenses. The arrangement must be genuine and documentable to withstand scrutiny.
If HRA is not part of your salary, you can still claim a deduction under Section 80GG (not HRA exemption). Under 80GG, you can claim the minimum of: (a) ₹5,000/month, (b) 25% of total income, or (c) actual rent − 10% of income. This is a fallback for employees without HRA in their CTC but it has lower limits than standard HRA exemption.
Yes — you can claim both if you're paying rent in the city where you work while your home loan property is in a different city (e.g., you bought a home in your hometown but rent in the city you work in). The Income Tax Department may scrutinise such claims, so maintain proper documentation: rent receipts, rental agreement, and proof that you cannot live in your own property.
Required documents: (1) Rent receipts (monthly) — should include landlord's name, address, rent amount, signature, and revenue stamp if > ₹5,000. (2) Rent agreement (leave and licence). (3) Landlord's PAN if annual rent > ₹1 lakh. Submit these to your employer before they compute your TDS. If you missed submitting, you can still claim the exemption when filing your own ITR.