What is HRA exemption?
Many salaried employees receive a house rent allowance (HRA) as part of their pay. If you live in a rented home and choose the old tax regime, part or all of that allowance is tax-free. The exempt amount isn't simply your rent — it's the lowest of three limits set by law. This HRA calculator works out all three, shows which one applies to you, and tells you how much of your HRA will still be taxed.
From FY 2026-27, under the new Income-tax Act, 2025, the higher 50% limit was extended from the original four metros to Bengaluru, Hyderabad, Pune, Ahmedabad as well — a big change for people working in those cities.
How to use it
- Choose the financial year and the city where you rent your home.
- Enter your monthly basic salary, the HRA you receive and the rent you pay.
- Set how many months you paid rent this year (for example 8 if you moved in August).
- Add dearness allowance or turnover commission if your salary includes them.
HRA exemption formula
Exempt HRA = least of: HRA received · Rent − 10% of salary · 50% (metro) or 40% (non-metro) of salary
Salary = basic + DA (if it forms part of retirement benefits) + commission on turnover, for the months you paid rent.
Example
Priya works in Bengaluru with a basic salary of ₹50,000 a month, receives ₹20,000 HRA and pays ₹22,000 rent for all 12 months. For the year: HRA received = ₹2,40,000; rent − 10% of salary = 2,64,000 − 60,000 =₹2,04,000; 50% of salary = ₹3,00,000. The lowest is ₹2,04,000, so that much is tax-free and ₹36,000 of her HRA is taxable.
Tips to claim HRA
- Submit rent receipts to your employer; add your landlord's PAN if rent exceeds ₹1 lakh a year.
- Pay rent by bank transfer or UPI so you have proof.
- Then compare both regimes in the income tax calculator.
Disclaimer: Results are estimates for educational purposes only and are not financial, investment or tax advice. Please verify with your bank, broker or a SEBI-registered adviser before acting. Read the full disclaimer.