HRA Exemption Calculator India

How the HRA exemption calculator works

House rent allowance is a salary component. The exemption is not “whatever rent you pay”. Indian tax law (historically Section 10(13A) read with Rule 2A; Tax Year 2026-27 follows the Income-tax Act, 2025 numbering) takes the least of three numbers, and only that least amount is exempt. Everything else in the HRA line stays taxable.

1. Actual HRA received during the year.
2. 50% of salary if you live in a metro city, 40% otherwise. Salary means basic + DA.
3. Rent paid minus 10% of salary (basic + DA).

If any leg is zero or negative, exemption is zero. Living in your own house, or paying rent below 10% of basic, is the usual way people discover that their “HRA” was never going to be exempt.

Old tax regime only — read this before you switch

This is the callout worth repeating: HRA exemption applies under the old tax regime only. The new / default regime for FY 2026-27 does not allow this exemption. If your employer still shows an HRA exemption on the payslip while you intend to file new-regime, your ITR and the payslip can disagree. Use this calculator, then run the same cash salary through the CTC to in-hand calculator with the regime toggle, and the old vs new tax regime calculator if deductions are large.

For many 10–15 LPA metro renters, HRA is the single reason the old regime still wins. For a 12 LPA employee with modest rent and no 80C beyond PF, the new regime’s ₹75,000 standard deduction and ₹12 lakh rebate usually win even after you “lose” HRA. Do not pick a regime from a WhatsApp screenshot.

Metro 50% vs non-metro 40%

The classic metro list for the 50% cap is Delhi, Mumbai, Kolkata and Chennai. For Tax Year 2026-27, several payroll teams also treat Bengaluru, Hyderabad, Pune and Ahmedabad as 50% cities. This site will not pretend a blog post is a gazette. Pick the percentage your Form 12BB / employer already uses. If you are unsure, run both and see whether it even changes the least-of-three — often rent minus 10% is the binding constraint, so the metro switch does nothing.

A worked example

Basic+DA ₹60,000 a month, HRA ₹30,000, rent ₹25,000, metro. Annual actual HRA = ₹3,60,000. 50% of basic+DA = ₹3,60,000. Rent − 10% of basic = (25,000 − 6,000) × 12 = ₹2,28,000. Exemption = ₹2,28,000. Taxable HRA remainder = ₹1,32,000. That remainder sits in taxable salary even on the old regime.

Same numbers, non-metro: leg 2 drops to 40% = ₹2,88,000. The least is still ₹2,28,000. Metro vs non-metro did not matter this time. Raise rent to ₹40,000 and it will.

Documents, landlord PAN, and living with parents

Payroll will ask for rent receipts. If rent in a year crosses ₹1 lakh, landlord PAN is the usual extra ask. Staying with parents and paying them rent can be a valid HRA claim when the rent is real, the parent reports it, and you can evidence it. A token ₹1,000 “rent” to a spouse is the sort of thing that fails both the formula and an enquiry. This calculator only does arithmetic.

DA is included in the base. Special allowance is not. If your CTC was redesigned under wage-code “50% basic” rules, both HRA received and the 10% leg move — rerun the numbers rather than recycling last year’s Form 16.

Taxable HRA remainder and Form 16

The number people forget is the taxable remainder: actual HRA minus the exemption. That remainder is salary income. It does not vanish because rent is high if HRA received is small, and it does not vanish because HRA received is large if you pay little rent. Your Form 16 should show both gross HRA and the exempt portion when payroll has processed Form 12BB. If they did not, you still compute the exemption in the ITR under the old regime — this calculator is that arithmetic, not an e-filing utility.

Changing cities mid-year, a few months of paying rent and a few in your own house, or a rent holiday should be pro-rated by month. We do not auto-split the year; run two periods and add the exemptions if your facts are that messy. That is slower and more honest than a single blended rent.