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HRA Calculator

HRA Calculator

Free HRA Calculator for India 2025. Calculate House Rent Allowance exemption under Section 10(13A). Check HRA tax benefits for metro & non-metro cities. Save tax on rent paid.

Metro: 50% exemption | Non-Metro: 40% exemption

Your monthly basic salary component

If applicable, else enter 0

Monthly HRA component in your salary

Monthly rent you pay for accommodation

What is HRA (House Rent Allowance)?

House Rent Allowance (HRA) is a component of salary provided by employers to employees to help them meet the cost of rented accommodation. It's governed by Section 10(13A) of the Income Tax Act, 1961, and is partially exempt from tax, making it one of the most significant tax-saving components for salaried individuals.

HRA is applicable only if you live in a rented house. If you live in your own house or don't pay rent, the entire HRA amount becomes taxable. The exemption amount is calculated based on a formula that considers your salary, the rent you pay, and the city you live in.

How Does HRA Exemption Work?

The Income Tax Department allows a deduction on HRA based on specific criteria. The exemption is calculated as the minimum of three amounts:

The Three Components

1. Actual HRA received from employer (per annum)

2. Actual rent paid minus 10% of basic salary [(Rent × 12) - (10% of Basic × 12)]

3. 50% of basic salary (metro cities) OR 40% of basic salary (non-metro cities)

Example Calculation

Let's say you live in Mumbai with the following salary structure:

  • Basic Salary: ₹50,000 per month
  • HRA Received: ₹20,000 per month
  • Actual Rent Paid: ₹25,000 per month

Calculation:

  • Component 1: ₹20,000 × 12 = ₹2,40,000
  • Component 2: (₹25,000 × 12) - (10% of ₹50,000 × 12) = ₹3,00,000 - ₹60,000 = ₹2,40,000
  • Component 3: 50% of (₹50,000 × 12) = ₹3,00,000
  • Exemption: Minimum of three = ₹2,40,000
  • Taxable HRA: ₹2,40,000 (total) - ₹2,40,000 (exempt) = ₹0

In this case, your entire HRA is tax-free!

Metro vs Non-Metro Cities

The HRA exemption limit varies based on whether you live in a metro or non-metro city:

Metro Cities (50% Limit)

Only four cities are officially recognized as metro cities for HRA purposes:

  • Delhi (National Capital Region)
  • Mumbai (including Navi Mumbai and Thane)
  • Chennai
  • Kolkata

For these cities, the exemption limit is 50% of basic salary + DA.

Non-Metro Cities (40% Limit)

All other cities in India fall under non-metro category:

  • Bangalore, Hyderabad, Pune (technically non-metro for HRA)
  • Ahmedabad, Jaipur, Lucknow, Chandigarh
  • All Tier-2, Tier-3 cities and towns

For these cities, the exemption limit is 40% of basic salary + DA.

HRA Tax Benefits

HRA is one of the most significant tax-saving tools for salaried employees. Here's how it helps:

Direct Tax Savings

The exempt portion of HRA is deducted from your taxable salary, reducing your overall tax liability. For example, if your HRA exemption is ₹2,40,000 and you're in the 30% tax bracket, you save approximately ₹74,880 in taxes (including 4% cess).

No Upper Limit (Practically)

Unlike Section 80C which has a ₹1.5 lakh cap, HRA has no absolute maximum limit. Your exemption depends on your actual rent and salary structure. Higher rent in metro cities can lead to substantial exemptions.

Salary Structure Optimization

Smart salary structuring with optimal HRA component can maximize tax savings. Ideally, HRA should be approximately 40-50% of basic salary for maximum benefit.

HRA vs Section 80GG

If you don't receive HRA from your employer, you can still claim deduction under Section 80GG:

Section 80GG - Who Can Claim?

  • Self-employed individuals
  • Salaried employees whose salary doesn't include HRA
  • You or your spouse/child should NOT own a house in the city where you work
  • You should NOT own any self-occupied residential property anywhere

80GG Deduction Amount

The deduction is the least of:

  • ₹5,000 per month (₹60,000 per year)
  • 25% of total income
  • Actual rent paid minus 10% of total income

Note: 80GG limit (₹60,000) is much lower than potential HRA exemption.

Documents Required for HRA Claim

To successfully claim HRA exemption, maintain these documents:

1. Rent Receipts

  • Monthly or quarterly rent receipts from landlord
  • Should include: Amount, Date, Period, Landlord's signature
  • Revenue stamp (₹1) if paying cash and amount > ₹5,000

2. Rent Agreement

  • Notarized or registered rental agreement
  • Should specify rent amount, duration, security deposit
  • Both tenant and landlord signatures

3. Landlord's PAN (Mandatory if Rent > ₹1,00,000/year)

  • If annual rent exceeds ₹1 lakh, landlord's PAN is mandatory
  • If landlord doesn't have PAN, Form 60 declaration required
  • Employer may ask for PAN copy

4. Bank Statements

  • Proof of rent payment through bank transfer
  • UPI/NEFT/IMPS transactions preferred over cash
  • Creates audit trail for verification

Common HRA Mistakes to Avoid

  1. Not maintaining rent receipts: Always take receipts for every payment
  2. Paying only in cash: Use digital payments for proof
  3. Missing landlord PAN: Get it before submitting claim
  4. Wrong calculation: Use our calculator to verify exemption amount
  5. Claiming for own house: HRA is only for rented accommodation
  6. Not submitting to employer: Submit before deadline to avoid excess TDS
  7. Fake receipts: Never create fake documents - heavy penalties apply

HRA and Home Loan Together

Yes, you can claim both HRA exemption and home loan benefits simultaneously!

Scenario 1: Own House in Different City

If you own a house in your hometown but work in another city and pay rent there, you can claim:

  • HRA exemption for rent paid in work city
  • Home loan principal deduction under 80C (₹1.5L limit)
  • Home loan interest deduction under Section 24 (₹2L limit for self-occupied)

Scenario 2: House Under Construction/Rented Out

If your own house is under construction or rented out, and you live in rented accommodation:

  • HRA exemption for current rented house
  • Home loan benefits for owned house
  • Rental income from owned house taxable, but can set off interest

Not Allowed

You cannot claim HRA if you live in your own house (self-occupied) and show it as rented. This is tax evasion and can attract heavy penalties under Income Tax Act.

Paying Rent to Parents

You can pay rent to your parents and claim HRA exemption, provided:

  • Actual Payment: Transfer real money (bank transfer preferred)
  • Rental Income: Parents must declare this income in their ITR
  • Ownership: Parents must own the house (not you)
  • Receipts: Get proper rent receipts from parents
  • Agreement: Have a simple rent agreement (optional but recommended)

Tax Efficiency: If parents are in lower tax bracket or senior citizens with basic exemption, this arrangement can save taxes for the family as a whole.

HRA in New Tax Regime

Important: HRA exemption is NOT available in the new tax regime (introduced in Budget 2020). The new regime offers lower tax rates but removes most deductions and exemptions.

Comparison

  • Old Regime: Higher tax rates + HRA exemption + 80C + 80D + other deductions
  • New Regime: Lower tax rates + NO HRA + NO 80C + Standard deduction only (₹50,000)

Which is Better?

Calculate tax under both regimes. Generally, if your total deductions exceed ₹3.5-4 lakhs, the old regime is better. Use our HRA calculator to see your exemption amount, then compare.

Calculate Your HRA Exemption

Use our HRA calculator above to determine your exact exemption amount. Simply enter:

  1. Your city type (metro or non-metro)
  2. Monthly basic salary + DA
  3. Monthly HRA received from employer
  4. Monthly rent you actually pay

The calculator will show you the exempt amount, taxable HRA, and estimated tax savings at different tax slab rates. Plan your taxes smartly and maximize your savings!

Pro Tip: If your rent is high but HRA component is low, consider restructuring your salary to increase HRA (up to 40-50% of basic) if your employer allows. This can significantly increase your tax savings without changing your CTC!

Frequently Asked Questions

What is HRA (House Rent Allowance)?
House Rent Allowance (HRA) is a component of salary given by employers to employees to meet their rental accommodation expenses. It's a tax-deductible allowance under Section 10(13A) of the Income Tax Act, 1961. HRA is applicable only to salaried individuals who live in rented accommodation. If you live in your own house or don't pay rent, HRA is fully taxable. The HRA exemption is calculated as the minimum of three components: actual HRA received, rent paid minus 10% of salary, and 50% of salary (40% for non-metro).
How is HRA exemption calculated?
HRA exemption is calculated as the least of the following three amounts: 1. Actual HRA received from employer (monthly HRA × 12), 2. Actual rent paid minus 10% of basic salary [(monthly rent × 12) - (10% of annual basic + DA)], 3. 50% of basic salary + DA (for metro cities) OR 40% of basic salary + DA (for non-metro cities). Example: If Basic = ₹50,000/month, HRA = ₹20,000/month, Rent = ₹25,000/month, in metro city: (1) ₹2,40,000, (2) ₹3,00,000 - ₹60,000 = ₹2,40,000, (3) 50% of ₹6,00,000 = ₹3,00,000. Exemption = ₹2,40,000 (least of three).
Which cities are considered metro cities for HRA?
For HRA exemption purposes, metro cities include: Delhi, Mumbai (including Navi Mumbai), Chennai, and Kolkata. These four cities qualify for the higher 50% exemption limit. All other cities in India are considered non-metro cities and qualify for the 40% exemption limit. Note: Some employers may also consider Hyderabad, Bangalore, and Pune as metro cities for their internal policies, but for income tax purposes, only the four cities mentioned above are officially recognized as metro cities for HRA calculation.
What documents are required to claim HRA exemption?
To claim HRA exemption, you need the following documents: 1. Rent Receipts: Monthly/quarterly rent receipts from landlord with PAN if annual rent exceeds ₹1,00,000. 2. Rent Agreement: Registered or non-registered rental agreement between you and landlord. 3. Landlord's PAN: Mandatory if annual rent paid exceeds ₹1,00,000 (₹8,333/month). If landlord doesn't have PAN, declaration in Form 60. 4. Bank Statement: Proof of rent payment through bank transfer (recommended). 5. Declaration: HRA declaration form from employer (usually submitted at beginning of financial year). Note: If paying cash, maintain receipts with revenue stamp. Digital payments via UPI/NEFT are preferred for audit trail.
Can I claim HRA if I live in my own house?
No, you cannot claim HRA exemption if you live in your own house. HRA exemption is only available if you actually pay rent for a residential accommodation. If you live in your own house (self-occupied property), the entire HRA amount received from your employer is taxable as part of your salary income. However, if you own a house but live in a different city due to employment and pay rent there, you can claim HRA for the rented accommodation. In such cases, you can also claim home loan benefits (principal under 80C and interest under 24) for your owned house simultaneously with HRA exemption.
What if my employer doesn't provide HRA?
If your employer doesn't provide HRA as part of your salary structure, you can still claim deduction for rent paid under Section 80GG of the Income Tax Act. The deduction under 80GG is the least of: (1) ₹5,000 per month (₹60,000 per year), (2) 25% of total income (excluding long-term capital gains, short-term capital gains under Section 111A, and deductions under Sections 80C to 80U), (3) Actual rent paid minus 10% of total income. Conditions for 80GG: You must be self-employed or salaried without HRA, you or your spouse/child should not own a house in the city where you work, and you must not own any self-occupied residential property anywhere.
Can I claim HRA and home loan benefits together?
Yes, you can claim both HRA exemption and home loan benefits simultaneously under certain conditions: Scenario 1 - Own house in different city: If you own a house in one city (say, hometown) but work and live in another city paying rent, you can claim HRA for rented accommodation + home loan principal (80C up to ₹1.5L) + home loan interest (Section 24 up to ₹2L). Scenario 2 - Own house but not occupied: If your own house is under construction or rented out, and you live in rented accommodation, both benefits are allowed. Not allowed: If you live in your own house (self-occupied) and claim HRA - this is tax evasion and can attract penalties.
How does HRA exemption affect my tax?
HRA exemption directly reduces your taxable salary income. Here's how it works: 1. Your employer pays HRA as part of salary (e.g., ₹20,000/month = ₹2,40,000/year). 2. Based on calculation, exemption is determined (e.g., ₹2,00,000). 3. Only the taxable portion (₹40,000) is added to your income. Tax savings example: If you're in 30% tax bracket, ₹2,00,000 exemption saves you ₹62,400 in taxes (including 4% cess). In Form 16: Exempt HRA is shown separately, and only taxable HRA is included in gross salary. In ITR: You report exempt HRA in Schedule S (Salary) and taxable HRA in total income. Proof submission: Submit rent receipts to employer before TDS deduction or claim refund while filing ITR.
What is the maximum HRA exemption I can claim?
There is no absolute maximum limit for HRA exemption, but it's constrained by the three-component calculation: 1. Cannot exceed actual HRA received from employer. 2. Cannot exceed actual rent paid minus 10% of salary. 3. Cannot exceed 50% of salary (metro) or 40% of salary (non-metro). Practical maximum: For someone with ₹1,00,000 basic salary in metro city paying ₹60,000 rent: Component 3 (limit) = ₹6,00,000/year. So maximum exemption cannot exceed ₹6 lakhs in this case. Note: If your rent is very high but salary is low, the 50%/40% cap becomes the limiting factor. Conversely, if HRA component in salary is low, that becomes the limiting factor.
Can I pay rent to my parents and claim HRA?
Yes, you can pay rent to your parents and claim HRA exemption, provided certain conditions are met: 1. Actual Payment: You must actually transfer rent money to your parents (bank transfer preferred over cash). 2. Rental Income: Your parents must declare this rental income in their tax return. 3. Valid Agreement: It's advisable to have a rent agreement, though not mandatory. 4. Rent Receipts: Parents should provide rent receipts. 5. Ownership Proof: Parents must own the house (ownership documents). Cannot claim if: You're a co-owner of the house, or if it's a sham transaction without actual payment. Tax planning tip: If parents are in lower tax bracket or senior citizens with basic exemption, this can be tax-efficient for the family as a whole.
What happens if I forget to submit HRA proof to employer?
If you don't submit HRA proof to your employer before the deadline (usually January/February), your employer will consider the entire HRA as taxable and deduct TDS accordingly. Your Form 16 will show higher taxable income. Solution: You can still claim HRA exemption while filing your Income Tax Return (ITR). Steps: (1) Calculate your HRA exemption using our calculator, (2) Fill Schedule S in ITR with exempt HRA amount, (3) Claim refund of excess TDS deducted, (4) Keep all rent receipts and documents safe for at least 7 years. Important: Ensure you have all required documents (rent receipts, agreement, landlord PAN if rent >₹1L/year) as the Income Tax Department may ask for verification. Timeline: File ITR before due date (usually July 31) to claim refund.
Is HRA exemption available in new tax regime?
No, HRA exemption is NOT available in the new tax regime. The new tax regime (introduced in Budget 2020) offers lower tax rates but disallows most deductions and exemptions, including HRA under Section 10(13A). Comparison: Old Regime: You can claim HRA exemption + other deductions (80C, 80D, etc.) but pay higher tax rates. New Regime: Lower tax rates but NO HRA exemption, NO 80C deductions, NO standard deduction (except for FY 2023-24 onwards, ₹50,000 standard deduction allowed). Which is better? Calculate tax under both regimes. Generally, if your total deductions (HRA + 80C + 80D + others) exceed ₹3.5-4 lakhs, old regime is better. Use our HRA calculator to determine your exemption amount, then compare with new regime tax liability. Default regime: From FY 2023-24, new regime is default, but you can opt for old regime while filing ITR.

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Disclaimer: This calculator is for informational purposes only. Actual returns may vary based on the bank's terms and conditions. Please verify current rates with Income Tax Department before making any financial decisions.