What is the HRA Exemption?
House Rent Allowance is partly tax-free under Section 10(13A) if you actually pay rent. The exemption is the least of three amounts, which is why people who assume "all my HRA is exempt" get it wrong.
Note that "salary" for HRA means basic plus dearness allowance only — not your gross CTC. HRA is available only under the old tax regime.
Formula & worked example
Take the smallest of these three:
2. Rent paid − 10% of (Basic + DA)
3. 50% of (Basic + DA) for metros, 40% for non-metros
Worked example: Basic ₹7,20,000, HRA ₹3,60,000, rent ₹3,00,000, metro. Test 1 = ₹3,60,000. Test 2 = 3,00,000 − 72,000 = ₹2,28,000. Test 3 = ₹3,60,000. The least is ₹2,28,000, so ₹1,32,000 of your HRA remains taxable. At a 30% slab the exemption saves about ₹71,000.
How to use this hra exemption calculator
- Enter basic salary (plus DA if your employer pays it) — not gross.
- Enter the HRA component from your salary structure.
- Enter the rent you actually pay, annually.
- Select metro or non-metro; only the four named cities count as metro.
Smart tips
- Rent above ₹1,00,000 a year requires your landlord's PAN in the declaration to your employer.
- Only Delhi, Mumbai, Kolkata and Chennai are metros for HRA. Bengaluru, Hyderabad and Pune are not, despite their rents.
- You can claim HRA and home loan interest together if you rent in one city and own a home elsewhere.
- Paying rent to a parent is legal if they genuinely own the property and declare the rental income.
- HRA is unavailable in the new regime — factor it in before choosing.
Frequently asked questions
How is HRA exemption calculated?
It is the least of: actual HRA received, rent paid minus 10% of basic+DA, and 50% (metro) or 40% (non-metro) of basic+DA.
Can I claim HRA without rent receipts?
Employers require receipts, and the landlord's PAN if rent exceeds ₹1 lakh a year. Claiming without genuine rent is tax fraud.
Is Bengaluru a metro for HRA?
No. Only Delhi, Mumbai, Kolkata and Chennai qualify, so Bengaluru residents get the 40% test.
Can I claim HRA and home loan together?
Yes, if you genuinely rent where you work and own a property elsewhere — or if your own home is genuinely let out.
Want the theory behind the numbers? Browse the Money Blog for worked guides.
Written by Gurjeet Singh, Sharpen Solutions. Last reviewed 15 Oct 2026. Sources: Income Tax Department — slab rates, s.87A rebate, surcharge and 4% cess, AY 2026-27 (page updated 9 Jul 2026). How we check these numbers.