HRA Calculator - Calculate House Rent Allowance Tax Exemption

Understanding HRA and Tax Exemption Rules

House Rent Allowance (HRA) is a component of your salary provided by employers to help cover accommodation expenses. Under Section 10(13A) of the Income Tax Act, a portion of HRA can be claimed as tax exemption, but the entire HRA received is not always fully exempt from tax.

HRA Exemption Calculation Formula

The HRA exemption is calculated as the minimum of three components: actual HRA received, 50% of basic salary for metro cities (40% for non-metro), and actual rent paid minus 10% of basic salary.

Metro vs Non-Metro Cities for HRA

Currently, only Delhi, Mumbai, Chennai, and Kolkata are considered metro cities for HRA exemption purposes. Living in a metro city allows you to claim a higher HRA exemption at 50%, whereas in non-metro cities, this percentage is capped at 40%.

Important HRA Rules and Requirements

• Salaried Employee Only: HRA exemption is valid only for salaried employees who receive HRA as part of their salary
• Rented Accommodation: You must live in rented accommodation to claim HRA exemption
• PAN Requirement: Landlord's PAN is mandatory if annual rent exceeds ₹1 lakh
• Old Tax Regime Only: HRA exemption is not available under the new tax regime
• Documentation: Maintain rent receipts, rental agreements, and payment proofs

Special Cases for HRA Claims

• Paying Rent to Parents: You can claim HRA exemption even if paying rent to parents, provided they own the house and declare this as rental income
• Own House + Rented Accommodation: You can claim both HRA and home loan benefits if you own a house but live in rented accommodation for work
• Section 80GG Alternative: If you don't receive HRA from employer, you can claim rent deduction under Section 80GG

Tax Savings from HRA Exemption

The actual tax savings from HRA exemption depends on your income tax slab. The exempt portion of HRA is not added to your taxable income, resulting in significant tax savings for higher income brackets.