HRA Exemption Calculator

Salaried employees who receive HRA and pay rent can exempt the least of three figures under the Income-tax Act’s HRA rules as commonly applied: actual HRA received, rent minus 10% of salary, and 50% of salary in notified metros or 40% elsewhere. This page runs that three-way minimum. It is indicative; the old-regime / new-regime choice still decides whether HRA exemption is even available to you.

The cash-flow question

Renters in Mumbai, Delhi, Kolkata and Chennai (the classic metro set for HRA) often leave money on the table, or claim more than the three-way test allows. A ₹6 lakh basic, ₹2.4 lakh HRA, ₹3 lakh rent, metro “yes” default fully exempts the HRA in this sketch (taxable HRA ₹0). That is a teaching example, not a licence to skip rent receipts.

The maths on this page

Exempt HRA = min(HRA received, rent − 10% of salary, 50% or 40% of salary). Defaults: salary ₹6,00,000, HRA ₹2,40,000, rent ₹3,00,000, metro yes → 50% of salary is ₹3,00,000, rent−10% is ₹2,40,000, HRA received is ₹2,40,000, so exempt = ₹2,40,000.

“Salary” for this rule is generally basic plus DA where DA enters retirement benefits. Payroll labels differ. If your Form 16 already computed HRA, trust that unless you have a reason to rework it.

New-regime filers typically cannot claim this exemption. Confirm the regime you opted on incometax.gov.in. Keep rent receipts and, where required, the landlord’s PAN for high rent.

Metro HRA for a T. Nagar renter

Priya in Chennai has ₹6 lakh basic, ₹2.4 lakh HRA and pays ₹3 lakh rent. Marking metro as yes, the three-way test exempts the entire ₹2.4 lakh HRA in this sketch. If she moved to Coimbatore and the metro flag flipped to no, 40% of salary would tighten the cap and some HRA could become taxable.

What a bank still has to confirm

Indicative only. Regime choice, definition of salary, metro notification list, and documentation rules are in the Act and CBDT circulars. This site never asks for PAN or landlord details.

Common questions

Which cities count as metro for the 50% cap?

The statute and rules have long treated Mumbai, Delhi, Kolkata and Chennai as the 50% cities; other locations typically use 40%. Confirm the current list in the HRA rule text or with a CA before you file.

I live in Bengaluru — is that metro for HRA?

Bengaluru is usually treated as non-metro for the 50%/40% HRA split, despite being a large city. Do not assume “metro” from newspaper language. Check the legal list.

Can I claim HRA while living with parents?

Only if there is a genuine rental arrangement that your tax facts support. This calculator cannot decide genuineness. That is a documentation and law question for a professional.