Eternexa

HRA Exemption Calculator

See exactly how much of your House Rent Allowance escapes tax — the least-of-three rule, metro vs non-metro, worked out live.

Your rent and salary

₹50,000

Basic salary + dearness allowance — not your full CTC

₹20,000
₹18,000

City type

Only Delhi, Mumbai, Kolkata, Chennai count as metros (50% of Basic+DA).

HRA exempt from tax
₹13,000/mo

₹1.56 Lakh a year escapes tax · ₹7,000/mo stays taxable

65%of your HRA escapes tax
Exempt a year
₹1.56 Lakh
Taxable a month
₹7,000
Of HRA received
65%
  • Exempt from tax
  • Stays taxable
The HRA exemption exists in the old tax regime only — the new (default) regime taxes your entire HRA. Weigh which regime wins overall with the income-tax calculator.

The least of three

Rule 2A tests three figures and gives you the smallest. The shortest bar is the one that decides your exemption.

(a) Actual HRA received
₹20,000/mo
(b) Rent − 10% of Basic+DA — the least, so it binds
₹13,000/mo
(c) 50% of Basic+DA
₹25,000/mo
= Exempt HRA
₹13,000/mothe least of the three

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What is the HRA exemption?

House Rent Allowance is the one salary component that can legally vanish from your taxable income — if you actually pay rent. Under Section 10(13A) and Rule 2A, part (sometimes all) of the HRA your employer pays is exempt from income tax, and for renters in big cities it is routinely the single largest tax break on the payslip — bigger than 80C for many.

The least-of-three rule

Your exempt HRA is the least of these three amounts:

  • (a) the HRA you actually received
  • (b) rent paid minus 10% of Basic + DA
  • (c) 50% of Basic + DA in a metro, 40% elsewhere

“Salary” here means Basic plus dearness allowance (plus turnover-based commission, for the few who earn it) — never the full CTC.

Worked example: Basic + DA ₹30,000/month, HRA ₹13,000, rent ₹10,000 in a non-metro. The three limbs: (a) ₹13,000 · (b) 10,000 − 3,000 = ₹7,000 · (c) ₹12,000. The least is ₹7,000/month — ₹84,000 a year off your taxable income, while the remaining ₹6,000/month of HRA stays taxable.

Metro means exactly four cities

Only Delhi, Mumbai, Kolkata and Chennai qualify for the 50% limb. Bengaluru, Hyderabad, Pune, Noida and Gurgaon — whatever their rents — are 40% cities in the eyes of Rule 2A, a list unchanged for decades. (Living in an NCR suburb but working in Delhi? What matters is where the rented house is.)

Old regime only — check before you celebrate

The HRA exemption belongs to the old tax regime. The new regime — the default since FY 2023-24 and the one most filers now use — taxes HRA fully, trading exemptions for lower slab rates. So the real question is not “how much HRA can I exempt?” but “does the old regime, with my HRA plus other deductions, beat the new one?” Feed the exempt amount from this page into the old-vs-new comparison, and see where your take-home actually lands.

The paperwork that makes it stick

Rent receipts (or bank transfers) are your evidence; your employer needs the landlord’s PAN once rent exceeds ₹1 lakh a year (~₹8,334/month), and paying above ₹50,000/month obliges you to deduct 5% TDS under 194-IB. Paying rent to a parent is legitimate — real transfers, a rent agreement, and the parent declaring the income — but paying a spouse rarely survives scrutiny. Rent or salary changed mid-year? The rule is applied period by period, so run each stretch separately in the calculator and add them up. And if your job has no HRA component at all, Section 80GG offers a smaller cousin (capped at ₹5,000/month, old regime again).

Frequently asked questions

Can I claim HRA while paying rent to my parents?
Yes — it is a recognised, legal arrangement if it is real: transfer the rent (ideally by bank), keep a simple rent agreement and receipts, and your parent must show the rent as income in their return. Paying a spouse, by contrast, is routinely disallowed.
Does the new tax regime allow HRA exemption?
No. The new (default) regime taxes HRA fully — the exemption exists only if you opt for the old regime. Whether that trade is worth it depends on your total deductions; compare both regimes with your real numbers before choosing.
When do I need my landlord’s PAN?
Once annual rent crosses ₹1 lakh (about ₹8,334/month), your employer must collect the landlord’s PAN to allow the exemption in TDS. Above ₹50,000/month rent, you must also deduct 5% TDS on the rent yourself under Section 194-IB.
Can my spouse and I both claim HRA on the same house?
Only by genuinely splitting the rent — each claims the share they actually pay, and the total claimed cannot exceed the rent. Both claiming the full rent is a classic mismatch notice waiting to happen.
Can I claim HRA and a home-loan deduction together?
Yes, when both are genuine — e.g., you own a house in one city (claiming 24(b) interest) but rent in another for work. Renting while your own vacant house sits in the same city invites questions, so keep the story and the paperwork consistent.

Related calculators

Income Tax

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Take-Home Salary

Turn your CTC into real monthly in-hand pay — with PF, gratuity, professional tax and income tax broken down.

Gratuity

Your gratuity under the 15/26 formula — Act coverage, the service-rounding rule, the ₹20 lakh cap and tax treatment, all handled.

Figures last checked: , against Income-tax Rule 2A (least-of-three). They apply to FY 2026-27. Rates and limits change — verify anything you are about to act on against the official source.

Disclaimer: Eternexa is an independent app and is not affiliated with, endorsed by, or representing the Income Tax Department, the Government of India, or any government entity, and does not provide official government services. This calculator gives an estimate for general information only — it is not financial, investment or tax advice. Tax and finance figures follow FY 2026-27rules and are based on publicly available information from official sources such as incometax.gov.in and epfindia.gov.in. Always verify important numbers with the official source or a qualified professional before acting on them.