If you live in rented accommodation and receive House Rent Allowance as part of your salary, the Income Tax Act lets you exclude a portion of it from taxable income under Section 10(13A) — often the single biggest tax saver for salaried renters. The exemption is the least of three figures: actual HRA received, rent paid minus 10% of salary, and 50% of salary (metro cities) or 40% (non-metro). Getting it right matters because employers compute it monthly from your rent receipts, and the final figure reconciles when you file. This calculator applies the three-way test to your salary, HRA and rent, and tells you the exempt and taxable portions — plus what changes if you move between a metro and a non-metro city.
The HRA formula
Example
Basic+DA ₹50,000/month, HRA ₹20,000/month, rent ₹18,000/month, Mumbai. (a) ₹2,40,000, (b) ₹1,56,000, (c) ₹3,00,000. Exemption = ₹1,56,000/year; the remaining ₹84,000 of HRA is taxable.
Proofs you need
Employers typically ask for rent receipts or a rent agreement; for rent above ₹1,00,000/year you must furnish the landlord's PAN. Paying rent to parents is allowed if they declare it as income and you have a genuine agreement — paying rent to a spouse is not accepted.
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Frequently asked questions
Which cities count as metro for HRA?
Delhi, Mumbai, Chennai and Kolkata get the 50% limit; all other cities use 40%.
Can I claim HRA and home loan benefits together?
Yes, if you genuinely live in rented accommodation in one city while owning a let-out or under-construction property elsewhere (or working in a different city).
Is HRA exemption available in the new tax regime?
No — the new regime disallows the HRA exemption. This is one of the main reasons renters often do better in the old regime.
What if my rent is less than 10% of salary?
Then (b) is zero or negative and no exemption is available — the math only helps when rent meaningfully exceeds 10% of salary.