How HRA exemption is calculated
If you're a salaried employee who receives House Rent Allowance and pays rent, part of your HRA is exempt from income tax. The exempt amount is the least of these three:
1. The actual HRA you receive
2. 50% of (Basic + DA) if you live in a metro, else 40%
3. Rent paid − 10% of (Basic + DA)
Whichever of these is smallest is your exemption; the rest of your HRA is taxable. Only Delhi, Mumbai, Kolkata and Chennai count as metros (50%); every other city is 40%.
How to use this calculator
- Enter your basic salary + DA (monthly). Use your monthly basic salary plus dearness allowance (DA) — not your full CTC. HRA limits are calculated on this figure.
- Enter the HRA you receive (monthly). The House Rent Allowance component shown on your payslip, per month.
- Enter your monthly rent and city type. Add the rent you actually pay, and choose metro (Delhi, Mumbai, Kolkata, Chennai — 50%) or non-metro (40%).
- See your exempt and taxable HRA. The calculator shows the three limits, highlights the lowest (your exemption), and gives the taxable remainder — monthly and annual.
Documents you need to claim HRA
- Rent receipts for the months you claim
- Your landlord's PAN if annual rent exceeds ₹1,00,000
- Ideally a rent agreement, especially if paying rent to family
Keep a receipt every month so your claim is painless — you can make them free with the rent receipt generator.
Frequently asked questions
What is HRA and how is the exemption calculated?
House Rent Allowance (HRA) is a salary component paid to employees to cover rent. The tax-exempt portion is the least of three amounts: (1) the actual HRA you receive, (2) 50% of your basic salary plus DA if you live in a metro city, or 40% if non-metro, and (3) the rent you pay minus 10% of your basic salary plus DA. The remaining HRA is taxable.
Which cities count as 'metro' for HRA?
For HRA exemption, only Delhi, Mumbai, Kolkata, and Chennai are treated as metro cities, where the 50% limit applies. Every other city — including Bengaluru, Hyderabad, Pune, Gurugram, and Noida — is treated as non-metro, where the limit is 40%.
What documents do I need to claim HRA?
You generally need rent receipts for the months you claim, and if your annual rent exceeds ₹1,00,000, your landlord's PAN. Employers usually ask for these when you declare HRA. Keeping a receipt every month makes the claim painless — you can make them free with the RentStalk rent receipt generator.
Can I claim HRA if I pay rent to my parents?
Yes, you can claim HRA for rent paid to your parents if they actually own the property and you genuinely pay them rent. Keep proper rent receipts and ideally a rent agreement, and note that your parents must declare that rent as income. You cannot claim HRA for rent paid to a spouse.
Does the HRA exemption use monthly or annual figures?
The exemption is calculated on the actual period, but it's easiest to compute per month and then total it. This calculator takes monthly figures and shows both your monthly exempt amount and the annual equivalent. If your salary or rent changed during the year, calculate each period separately.
Is this HRA calculator accurate for my tax return?
It applies the standard HRA exemption formula and is a reliable estimate for planning. For your actual filing, confirm the figures with your Form 16, your employer, or a tax professional — this tool is for guidance, not tax advice.