HRA exemption calculator
Estimate HRA exemption using the three-part test (actual HRA, rent minus 10% salary, and salary percentage cap). This is typically relevant under the old tax regime.
Reviewed July 2026 · FY 2026–27 (AY 2027–28) tax slabs in engine · Methodology
The three tests are computed from your inputs — see the accuracy card for regime and payroll caveats.
Required inputs
- Basic salary (annual, ₹)
- DA (annual, ₹) — if part of retirement benefits
- HRA received (annual, ₹)
- Rent paid (annual, ₹)
- Metro vs non-metro (for the 50% / 40% test)
Assumptions used by this estimate
- Metro uses 50% of (Basic+DA); non-metro uses 40%.
- Rent test uses rent − 10% of (Basic+DA).
- Exemption is the minimum of the three Section 10(13A) tests implemented in code.
Worked example (same engine as live calculator)
Engine snapshot: Basic ₹8,00,000/year, DA ₹0/year, HRA received ₹3,60,000/year, rent ₹3,00,000/year, metro. Annual exemption (min of three tests) ₹2,20,000.
FAQ
Is this valid under the new regime?
HRA exemption is generally a feature of the old regime tax computation. Treat this as a planning reference for rent vs HRA structuring.
Related guides
Spotted a wrong number or confusing label? Report a calculation error — every report gets checked against the engine.
What is HRA exemption and who can claim it
House Rent Allowance (HRA) is a salary component that partially offsets your rent expense. Section 10(13A) of the Income Tax Act allows a portion of HRA to be exempt from tax — but only if you are actually paying rent, and only under the old tax regime. If you opt for the new regime, HRA exemption is not available regardless of what your payslip shows.
You cannot claim HRA exemption for a home you own and occupy without paying genuine rent — the component is fully taxable in that case even if it's listed on your payslip. Owning a different property (in another city, or one you don't live in) does not automatically disqualify a valid HRA claim for the place you actually rent.
The three-part test: how the exempt amount is calculated▾
The exempt amount is the lowest of three figures. You do not get to pick — the tax rules take whichever is smallest:
- Actual HRA received from employer — whatever is shown on your payslip as the HRA component (annual).
- Actual rent paid minus 10% of Basic+DA — if you pay ₹20,000/month in rent and your annual Basic+DA is ₹6,00,000, this figure is (₹2,40,000 − ₹60,000) = ₹1,80,000.
- 50% of Basic+DA (metro) or 40% of Basic+DA (non-metro) — metro cities are Delhi, Mumbai, Kolkata, and Chennai. All other cities — including Bengaluru, Hyderabad, Pune, and Ahmedabad — are classified as non-metro for HRA purposes under current rules.
This means increasing your HRA component on paper does not automatically give you a larger exemption if rent actually paid is the binding constraint.
Common mistakes that reduce or eliminate the HRA benefit▾
- Not submitting rent receipts: If you fail to submit rent receipts and a rental agreement to your employer before the declaration deadline (typically December–January), TDS is calculated without the HRA exemption. You can claim it in your ITR filing, but it requires documentation.
- Paying rent to immediate family: The Income Tax Department scrutinizes rent paid to spouses. Paying rent to a parent is permissible if the parent owns the property and declares the rental income in their own tax return.
- PAN of landlord not provided above ₹1 lakh/year:If annual rent exceeds ₹1,00,000, you must provide the landlord's PAN to your employer. Without it, the employer cannot give you the full exemption.
- Choosing new regime but expecting HRA: The new tax regime does not allow HRA exemption under Section 10(13A). Employees who choose or default to the new regime should not expect this benefit.
How much tax HRA exemption actually saves▾
The tax saving equals the exemption amount multiplied by your marginal tax rate. For a taxpayer whose relevant taxable income falls in the 30% slab (old regime: taxable income above ₹10 lakh) with an exemption of ₹1.5 lakh, the annual saving is approximately ₹1.5L × 30% × (1 + 4% cess) = roughly ₹46,800. At the 20% slab, the same exemption saves around ₹31,200/year.
This is why the old regime can still make sense for employees paying significant rent in metro cities, particularly above ₹15,000/month, even though the new regime's slabs are lower.