HRA Calculator

What is HRA and how is exemption calculated?

HRA or House Rent Allowance is the part of the salary you receive from your employer for expenses incurred toward rented accommodation. Anybody living in a rented accommodation can claim HRA, though variables like your basic salary, rent paid, HRA receivable, and city of residence decide the exact calculation. It is exempted under Section 10(13A) of the Income Tax Act, 1961.

The exemption is the least of three values: (1) actual HRA received, (2) rent paid minus 10% of basic salary plus dearness allowance, and (3) 50% of basic salary plus DA for metro cities, or 40% for non-metro cities.

For example, on a ₹40,000 basic salary, ₹18,000 HRA, and ₹15,000 rent in Mumbai: rent minus 10% of salary is ₹11,000, HRA received is ₹18,000, and 50% of salary is ₹20,000. The lowest, ₹11,000, is exempt.

From FY 2026-27, Bangalore, Hyderabad, Pune, and Ahmedabad also qualify for the 50% metro rate under Rule 279 of the Income-tax Rules, 2026 (previously Rule 2A of the 1962 rules). FY 2025-26 filings still use the earlier four-city list.

How to use the HRA calculator

Using the calculator takes less than a minute and needs no manual math.

• Enter your basic salary and dearness allowance for the year.
• Select whether you live in one of the eight metro cities: Delhi, Mumbai, Kolkata, Chennai, Bangalore, Hyderabad, Pune, or Ahmedabad.
• Enter the total HRA received from your employer.
• Enter the actual rent you paid during the year.
• Select Calculate to instantly view your exempt HRA amount and the portion of HRA that remains chargeable to tax.

Behind the scenes, the calculator applies three-rule formula described below, comparing actual HRA received, rent paid minus 10% of salary, and the applicable metro or non-metro percentage of your basic salary, then returns the lowest of the three as your tax-free amount. This saves you from calculating each condition by hand every time your salary, rent, or city changes.

Eligibility for HRA exemption

As per Section 10(13A) of the Income Tax Act, salaried employees living in a rented accommodation are eligible for tax deduction under HRA. You cannot claim HRA if you live in your own house or in rent-free accommodation provided by your employer, and the exemption is available only under the old tax regime; it cannot be claimed under the new tax regime.

Documents required for HRA claim

Employees must present rent receipts or other documentation as proof of rental expenses to claim the exemption. If annual rent exceeds ₹1 lakh, the landlord's PAN is mandatory. Declarations are now made on Form 124, which replaced Form 12BB; if the rent is paid to a family member and exceeds ₹1 lakh a year, the relationship with the landlord must also be disclosed on this form. It is advisable to keep accurate records, including rent agreements and payment proof, to back up the claim when filing an income tax return, since the regulations governing HRA can change.

Variables for HRA exemption calculation

Basic Salary

A fundamental component of an employee's pay and includes a fixed amount of money. It doesn't include any bonuses, overtime pay, or additional allowances.

Dearness Allowance

It is another salary component given by an employer to counter the impact of inflation of the cost of living.

Metro vs non-metro city

Living in a metro or non-metro city affects your HRA calculation, since the exemption formula uses 50% of basic salary plus DA for metro cities and 40% for non-metro cities. As of FY 2026-27, eight cities qualify as metro for this purpose: Delhi, Mumbai, Kolkata, Chennai, Bangalore, Hyderabad, Pune, and Ahmedabad; every other city is treated as non-metro.

HRA received

It is a salary component where the employer provides allowances to individuals living in a rented space.

Rent paid

It includes the amount paid by a salaried employee on the rental accommodation.