HRA Exemption Calculator

HRA Exemption Calculator — Find Exactly How Much of Your HRA Is Tax-Free

House Rent Allowance exemption is one of the most valuable tax benefits available to salaried employees — but it is also one of the most commonly miscalculated. The exemption is not your full HRA. It is the lowest of three specific conditions laid down under Section 10(13A) of the Income Tax Act. This HRA exemption calculator applies all three conditions and picks the minimum automatically, giving you the exact exemption amount you can legitimately claim.

Enter your monthly basic salary, DA (if applicable), HRA received from your employer, rent paid per month, and select your city type — metro or non-metro. The result shows monthly exemption, annual exemption, and the taxable portion of your HRA.

The Three Conditions — Exactly How the Exemption Is Determined

The HRA exemption is the lowest of:

Condition 1: The actual HRA you receive from your employer each month.

Condition 2: The rent you pay minus 10 percent of your basic salary plus DA per month. If this works out to zero or negative (because your rent is very low relative to your salary), your exemption on this condition is nil.

Condition 3: 50 percent of your basic salary plus DA if you live in a metro city (Delhi, Mumbai, Chennai, or Kolkata), or 40 percent if you live anywhere else in India.

Your exemption is whichever of these three is the smallest. This calculator works it out for all three and shows you the result.

Metro vs Non-Metro — How Much It Matters

For someone with a basic salary of ₹60,000 per month paying ₹20,000 in rent, the third condition allows ₹30,000 exemption in a metro city but only ₹24,000 in a non-metro city. Over a full financial year, that is a ₹72,000 difference in exemption — which at a 30 percent tax rate represents ₹21,600 in additional tax if the wrong city classification is used. The distinction is specifically about the city of residence, not the city of your employer’s registration.

Important: HRA Exemption Only Under Old Tax Regime

HRA exemption is available exclusively under the old income tax regime. If you have opted for the new regime for FY 2024-25, you cannot claim HRA exemption regardless of the rent you pay. This is one of the key trade-offs to evaluate when comparing the two regimes — for employees paying high rent in metro cities, the HRA benefit under the old regime can be substantial enough to make it the more advantageous choice.

Documentation You Will Need

Rent receipts from your landlord for every month of the financial year. If your annual rent exceeds ₹1 lakh (more than ₹8,333 per month), you must also collect your landlord’s PAN card. Rent paid to a spouse is not eligible for HRA exemption. These documents must be submitted to your employer for accurate TDS computation and kept for ITR filing.

Disclaimer: HRA exemption applies only under the old income tax regime. Tax rules may change. Consult a tax advisor for situation-specific guidance.