How to use the HRA Exemption Calculator
- Enter your monthly basic salary plus dearness allowance (DA) that counts towards retirement benefits. You can find it on your payslip.
- Enter the monthly HRA your employer pays you.
- Enter the rent you actually pay every month.
- Choose whether your city is one of the eight that get the 50% rate (Delhi, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Pune and Ahmedabad) or any other city at 40%, then read the yearly exempt and taxable HRA.
Formula used
Exempt HRA = the lowest of (1) actual HRA received, (2) rent paid − 10% of basic salary + DA, and (3) 50% of basic + DA in a metro city or 40% in a non-metro city.
Worked example
Here is the HRA Exemption Calculator worked through with the example values shown above, so you can check each step by hand.
| Inputs | |
|---|---|
| Monthly basic salary + DA | ₹50,000 |
| Monthly HRA received | ₹20,000 |
| Monthly rent paid | ₹18,000 |
| City type | 50% city: Delhi, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Pune, Ahmedabad |
| Result | |
| HRA exempt from tax (per year) | ₹1,56,000 |
| HRA taxable (per year) | ₹84,000 |
| Exempt per month | ₹13,000 |
| Lowest of the three limits | Rent paid minus 10% of basic |
Exemption at different rents
For the default salary and HRA, this is how the exempt and taxable HRA change as the monthly rent changes.
| Monthly rent paid | HRA exempt from tax (per year) | HRA taxable (per year) |
|---|---|---|
| ₹10,000 | ₹60,000 | ₹1,80,000 |
| ₹15,000 | ₹1,20,000 | ₹1,20,000 |
| ₹18,000 | ₹1,56,000 | ₹84,000 |
| ₹20,000 | ₹1,80,000 | ₹60,000 |
| ₹25,000 | ₹2,40,000 | ₹0 |
| ₹30,000 | ₹2,40,000 | ₹0 |
The three-way rule
The exempt HRA is the lowest of three amounts: (1) the HRA you actually receive, (2) the rent you pay minus 10% of your basic salary plus DA, and (3) 50% of basic plus DA if you live in one of the cities that get the higher rate (the metro list below), or 40% if you do not. Whichever is smallest becomes your exemption, and the rest of your HRA is added to your taxable income.
Take the default example. Basic plus DA is ₹50,000, HRA received is ₹20,000 and rent is ₹18,000 in a metro city. The three amounts are ₹20,000 (actual HRA), ₹13,000 (rent ₹18,000 minus ₹5,000) and ₹25,000 (50% of basic). The lowest is ₹13,000, so ₹13,000 a month is exempt, which is ₹1,56,000 a year. The other ₹84,000 of HRA is taxable.
Why the rent you pay matters so much
Because the second limit depends on rent, paying less rent can cut your exemption sharply. With the same salary, monthly rent of ₹10,000 gives an exemption of ₹5,000 a month, rent of ₹15,000 gives ₹10,000, ₹20,000 gives ₹15,000 and ₹30,000 gives ₹20,000, which is capped by the actual HRA of ₹20,000.
If you pay no rent, for example because you live in your own house or with family and do not pay them, the exemption is zero and the whole HRA is taxable. If you do pay rent to a family member such as a parent, it must be a genuine arrangement, supported by proof, and the owner must show it as income in their own return.
Documents and conditions to keep ready
Employers usually ask for rent receipts or a rent agreement when you declare HRA, and they may ask for the landlord’s PAN when yearly rent is above a threshold, which was ₹1,00,000 for a long time and may differ under the 2026 rules. Keep proof of payment such as bank transfers.
You can claim HRA for the months you actually paid rent. If you moved or changed jobs during the year, work out each period separately. Check the current rules with your employer’s payroll team or a tax professional, because documentation requirements can change.
Old regime versus new regime, and which cities are metro
HRA exemption has traditionally been part of the old tax regime and not available under the new regime, so compare your total tax under both regimes before you choose. India’s income tax law was rewritten from 1 April 2026 (the Income-tax Act, 2025 and the Income-tax Rules, 2026), so confirm the current position with your payroll team or a tax professional. A higher HRA exemption, together with other deductions, can make the old regime better for some people, and the new regime can be better for others.
Traditionally the 50% limit applied to four cities: Delhi, Mumbai, Kolkata and Chennai. The Income-tax Rules, 2026, which came into force on 1 April 2026, extended the 50% rate to Bengaluru, Hyderabad, Pune and Ahmedabad as well, so eight cities now get 50% and all other places get 40%. That is the list the calculator’s 50% option refers to. Rules can change again, so confirm the current list before you rely on it.
Frequently asked questions
How is HRA exemption calculated?
It is the lowest of the actual HRA received, rent paid minus 10% of basic salary plus DA, and 50% (for the eight cities that get the higher rate) or 40% (all other cities) of basic salary plus DA. This calculator applies that rule.
Which salary counts for HRA?
Basic salary plus dearness allowance that forms part of retirement benefits, and certain commission linked to turnover. Special allowances and bonuses usually do not count. Check your payslip structure.
Can I claim HRA if I live with my parents?
Only if you really pay rent to them, with proof, and they declare it as income. A paper arrangement without payment does not qualify.
Is HRA exemption available under the new tax regime?
Traditionally it has been available only under the old regime. India’s income tax law was rewritten from 1 April 2026, so confirm the current position before filing.
Can I claim HRA and home loan benefits together?
Rules allow it in some situations, for example if you work in one city and own a house in another. Seek advice for your case.
Is the result my final tax saving?
No. It is the exempt amount of HRA. The tax you save depends on your slab and total income.
This calculator gives estimates for information only. Actual figures from a bank, employer, tax authority or doctor may differ. It is not financial, tax, legal or medical advice.