How to use this calculator
- Basic salary (annual) — your basic pay for the year. Not your CTC, not your gross. Look for the line literally called "Basic" on your payslip.
- Dearness allowance — only the portion that forms part of retirement benefits. Most private-sector employees can leave this at zero; it mainly affects government and PSU staff.
- HRA received — the total House Rent Allowance your employer actually paid you during the year.
- Rent paid — what you actually paid your landlord for the year. Maintenance charges paid separately to a society do not count.
- City type — metro or non-metro. This changes the percentage limit from 50% to 40%.
The formula and how the maths works
Section 10(13A) exempts the least of these three amounts:
- The actual HRA you received from your employer
- Rent paid minus 10% of salary
- 50% of salary if you live in a metro, 40% if you don't
"Salary" here has a narrow meaning: basic pay + dearness allowance (retirement-linked) + commission based on a fixed percentage of turnover. Your bonus, other allowances and employer PF contributions are all excluded. This is the single most common mistake people make — they plug in gross salary and get a number that is far too high.
Only four cities count as metros for this purpose: Delhi, Mumbai, Kolkata and Chennai. Bengaluru, Hyderabad, Pune, Gurugram and Noida all use the 40% limit, however expensive they have become.
Worked example
Priya works in Pune. Her annual basic is ₹6,00,000, she receives ₹2,40,000 in HRA, and she pays ₹18,000 a month in rent (₹2,16,000 for the year). She gets no DA.
| Rule | Working | Amount |
|---|---|---|
| 1. Actual HRA received | — | ₹2,40,000 |
| 2. Rent − 10% of salary | ₹2,16,000 − ₹60,000 | ₹1,56,000 |
| 3. 40% of salary (non-metro) | 40% × ₹6,00,000 | ₹2,40,000 |
| Exempt (least of the three) | — | ₹1,56,000 |
| Taxable HRA | ₹2,40,000 − ₹1,56,000 | ₹84,000 |
So ₹1,56,000 escapes tax and ₹84,000 is added to her taxable salary. If Priya is in the 20% slab, the exemption saves her roughly ₹32,400 including cess.
Notice that rule 2 is the binding one here. That is usually the case — which means your exemption is driven mostly by how much rent you pay relative to your basic salary, not by how much HRA your employer hands you.
How rent level changes your exemption
Same ₹6,00,000 basic, same ₹2,40,000 HRA, non-metro, at different rent levels:
| Monthly rent | Annual rent | Rent − 10% salary | Exempt HRA |
|---|---|---|---|
| ₹5,000 | ₹60,000 | ₹0 | ₹0 |
| ₹10,000 | ₹1,20,000 | ₹60,000 | ₹60,000 |
| ₹15,000 | ₹1,80,000 | ₹1,20,000 | ₹1,20,000 |
| ₹18,000 | ₹2,16,000 | ₹1,56,000 | ₹1,56,000 |
| ₹25,000 | ₹3,00,000 | ₹2,40,000 | ₹2,40,000 |
| ₹35,000 | ₹4,20,000 | ₹3,60,000 | ₹2,40,000 (capped) |
Two things stand out. If your rent is below 10% of your basic salary, your exemption is zero no matter how much HRA you receive. And past a point the exemption stops growing — capped by whichever of rules 1 and 3 is smaller.
Documents and rules worth knowing
- Landlord's PAN is required if your annual rent exceeds ₹1,00,000. Without it your employer will usually refuse the exemption at TDS stage.
- Rent receipts — keep them, plus bank transfer records. Cash rent with only a handwritten receipt is the weakest possible evidence.
- Paying rent to parents is allowed if the arrangement is genuine: they must actually own the property, money must move through a bank, and they must declare it as rental income in their own return.
- HRA plus home loan interest can both be claimed when the facts support it — for instance you own a flat in one city but rent in another for work.
- Mid-year changes — if your salary, rent or city changed during the year, compute each period separately and add them. Annual averages give the wrong answer.
Common mistakes
- Using gross salary or CTC instead of basic + eligible DA. This inflates the result badly.
- Treating Bengaluru, Hyderabad or Gurugram as metros. They aren't, for HRA.
- Including society maintenance charges in "rent paid".
- Claiming HRA while filing under the new regime — it simply won't be allowed.
- Forgetting that if you receive no HRA at all, Section 10(13A) doesn't apply. Section 80GG may help instead, with its own tighter limits.
Frequently Asked Questions
Can I claim HRA under the new tax regime?
No. HRA exemption under Section 10(13A) is available only in the old tax regime. The new regime, the default since FY 2023-24, removes it along with most other exemptions in exchange for lower slab rates.
Which cities count as metros for HRA?
Only four: Delhi, Mumbai, Kolkata and Chennai. These get the 50% limit. Every other city in India, including Bengaluru, Hyderabad, Pune and Gurugram, uses the 40% limit.
Does salary mean my full CTC?
No. For HRA it means basic pay plus dearness allowance that forms part of retirement benefits, plus commission based on a fixed percentage of turnover if applicable. Allowances, bonus and employer PF contributions are excluded.
Can I pay rent to my parents and claim HRA?
Yes, if the arrangement is genuine. Your parent must actually own the property, rent should move through a bank transfer, and they must declare it as income in their own return. A paper-only arrangement is likely to be disallowed.
What if my employer doesn't pay me HRA?
Section 10(13A) then doesn't apply. You may be able to claim a deduction under Section 80GG instead, provided neither you nor your spouse owns residential property at your place of work.
Do I need my landlord's PAN?
Yes, if annual rent exceeds ₹1,00,000. If your landlord refuses, ask for a written declaration with their name and address, though your employer may still decline it at TDS stage.
Can I claim HRA and home loan interest together?
Yes, when the facts genuinely support it — for example you own property in one city but live on rent in another for work. Be ready to explain the arrangement.
Is HRA worked out monthly or yearly?
Strictly, for each period during which the facts stay constant. If salary, rent or city changed mid-year, compute each stretch separately and add the results.
What happens to the HRA that isn't exempt?
It's added to your taxable salary and taxed at your slab rate, exactly like basic pay.
Are rent receipts compulsory?
Employers almost always require them for TDS. Even where yours doesn't, keep receipts and bank records — you may need to substantiate the claim later.
Related calculators and guides
Official sources: Income Tax Department
Disclaimer. This calculator provides estimates for general guidance only and is not financial, tax or legal advice. Rates, rules and limits change, and your own situation may differ. Please verify current figures with the relevant authority or a qualified professional before acting on them.