House Rent Allowance is the salary component meant to help employees pay for rented accommodation, and the Income Tax Act softens its tax bite. Under Section 10(13A), salaried employees living in rented houses can claim part of their HRA tax-free.
One critical point: HRA exemption is available only under the old tax regime. If you opt for the new regime with its lower slab rates, you cannot claim HRA exemption at all — that is the trade-off for simpler, lower rates. For employees whose HRA is a large part of their salary, the old regime often produces the lower tax bill despite its higher slab rates, so always compare both before filing.
This calculator runs the three-way comparison on your numbers. Enter your basic salary, the HRA component and your monthly rent, choose metro or non-metro, and it shows the exempt amount alongside the taxable balance — the figure you can actually use when planning your taxes for the year.
Keep your paperwork ready: rent receipts for every month, and your landlord’s PAN if your annual rent exceeds ₹1 lakh. Salaried employees claim the exemption through their employer, who adjusts TDS on salary accordingly — but the final responsibility for a correct claim rests with you.
How it works
The calculator starts by annualising your monthly rent. It then computes the three candidate figures the law compares: the actual HRA you receive during the year, half your basic salary if you live in a metro city or 40% if you live elsewhere, and your annual rent minus one-tenth of your basic salary. The exemption is the smallest of these three numbers.
Each leg of the comparison has a logic behind it. You cannot exempt more HRA than you actually receive; the metro versus non-metro cap reflects the higher rents in big cities; and the rent-minus-10%-of-basic figure ensures the exemption reflects rent genuinely paid above a reasonable share of your own salary. If your rent is only slightly above 10% of basic, this third figure — and therefore your exemption — will be small.
Whatever remains of your HRA after subtracting the exempt amount is taxable salary, and the calculator shows both figures clearly. Note that the tool assumes the old tax regime: under the new regime the exemption is zero regardless of your rent. Use the result together with an income tax comparison to decide which regime actually saves you more.
How to use this tool
- Enter your annual basic salary plus dearness allowance, excluding other allowances.
- Enter the annual HRA component of your salary.
- Enter your actual monthly rent paid for the rented house.
- Select metro (Delhi, Mumbai, Chennai, Kolkata) or non-metro.
- Click Calculate to see your exempt HRA and the taxable balance.
- Compare old vs new regime tax to confirm the exemption actually saves you money.
Practical tips
- Your rent must exceed 10% of basic salary for any exemption at all — paying very low rent relative to salary yields little or no tax benefit.
- If your annual rent crosses ₹1 lakh, your landlord's PAN is mandatory; without it your employer may deny the exemption and deduct higher TDS.
- Paying rent to parents is allowed only if it is genuine — keep receipts, a rent agreement, and ensure your parents declare the rental income.
- Always compare the old and new tax regimes before filing; a large HRA often makes the old regime cheaper, but run your own numbers every year.
Frequently asked questions
Which cities count as metros for HRA?
For HRA exemption, the metro cities are Delhi, Mumbai, Chennai and Kolkata — where the relevant limit is 50% of basic salary. Everywhere else in India, the limit is 40% of basic salary. Living in a metro therefore gives you a higher potential exemption for the same rent, so select the right option in the calculator.
Can I claim HRA if I live with my parents?
Yes, provided you genuinely pay rent to your parents and they declare that rental income in their tax return. Keep proper rent receipts and, ideally, a written rent agreement. The arrangement must be genuine — tax authorities can question claims that look like circular family transfers with no real rent changing hands.
Do I need my landlord's PAN?
If your annual rent exceeds ₹1 lakh, you must report your landlord's PAN to your employer to claim the exemption. Without it, your employer may deny the exemption and deduct higher TDS from your salary. Keep monthly rent receipts as proof regardless of the amount — they are your first line of defence if your claim is ever scrutinised.
Can I claim HRA under the new tax regime?
No. The new tax regime does not allow HRA exemption or most other deductions — that is the trade-off for its lower slab rates. If HRA forms a large part of your salary, compare both regimes with our income tax calculator before choosing: for high-HRA earners, the old regime often produces the lower tax bill despite higher slab rates.
What counts as basic salary for the HRA calculation?
Basic salary generally means your basic pay plus dearness allowance where DA forms part of retirement benefits — in practice, most calculators use basic plus DA as standard practice. Other allowances such as conveyance or special allowance are excluded. Using only the basic-plus-DA figure keeps the rent-minus-10% leg of the calculation accurate.
Can I claim HRA if I own a house in a different city?
Yes. Owning a house does not block HRA exemption as long as you genuinely live in rented accommodation in the city where you work — for example, owning a flat in your hometown while renting near your office. You will need rent receipts as usual.
Note: Estimates for planning only; tax rules change with each budget and HRA exemption applies only under the old regime — this is not financial advice.