🏠 HRA Calculator 📊 Free Tool ⚖️ As per IT Act 2025

HRA Exemption Calculator 2026

Calculate your House Rent Allowance tax exemption instantly. Updated as per Income Tax Act 2025 & IT Rules 2026.

100% Accurate
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Legal Provisions Included

Calculate Your HRA Exemption

Enter your basic salary per month
Enter 0 if not applicable
HRA component in your salary
Actual rent you pay
Choose your city classification

Your HRA Tax Exemption

₹0

Tax-free amount per month

Calculation Breakdown:
Actual HRA Received ₹0
Rent Paid - 10% of Basic + DA ₹0
50% of Basic + DA ₹0
HRA Exemption (Minimum of above) ₹0
Tax Saved: ₹0 (assuming 30% tax bracket)

What is House Rent Allowance (HRA)?

House Rent Allowance (HRA) is a component of your salary provided by employers to meet accommodation expenses if you live in a rented house.

HRA is partially or fully exempt from income tax under Section 11 (read with schedule III) of the Income Tax Act 2025 and Section 10(13A) of the Income Tax Act 1961, subject to certain conditions and calculations. However HRA exemption is available only in old regime.

Key Benefits of HRA

  • Reduces your taxable income
  • Saves income tax (can save ₹30,000 to ₹1,50,000 per year)
  • No need to invest money (unlike 80C deductions)
  • Automatic benefit if you pay rent

Legal Provisions: Income Tax Act 2025 & Rules 2026

Section 11 - Income Tax Act, 2025 (section 10(13A) of Income Tax Act, 1961)

Exemption of House Rent Allowance:

"In the case of an individual, house rent allowance, to the extent provided for by Rules made under this Act."

Applicability: This section provides that HRA received by an employee shall be exempt from tax to the extent and subject to conditions as may be prescribed in the Income Tax Rules.

Rule 279 of Income Tax Rules, 2026 (Rule 2A - Income Tax Rules,1962)

Conditions for exemption of house rent allowance:

The amount of house rent allowance exempt from tax shall be the minimum of the following three amounts:

  1. Actual HRA Received from the employer
  2. Rent paid minus 10% of salary (Salary = Basic + DA)
    Formula: (Rent Paid - 10% of [Basic Salary + DA])
  3. 50% of salary for individuals residing in metro cities (Mumbai, Delhi, Chennai, Kolkata, Pune, Hyderabad, Ahmedabad, Bengaluru)
    (Upto FY 2025-26 only Mumbai, Delhi, Chennai, Kolkata are included in metro cities for 50%)
    40% of salary for non-metro cities
    Salary = Basic Salary + Dearness Allowance
Important Note: For the purpose of this calculation:
  • "Salary" means Basic Salary + Dearness Allowance (DA)
  • Does NOT include other allowances like HRA itself, Special Allowance, Conveyance, etc.
  • Commission, if based on fixed percentage of turnover, is included in salary
Metro vs Non-Metro Classification

Metro Cities (50% of salary):

  • Mumbai (Greater Mumbai)
  • Delhi (NCT of Delhi)
  • Kolkata
  • Chennai
  • Hyderabad
  • Pune
  • Bengaluru
  • Ahmedabad
    • (Upto FY 2025-26 only Mumbai, Delhi, Chennai, Kolkata are included in metro cities for 50%)

Non-Metro Cities (40% of salary):

From Tax Year 2026-27 All other cities and towns in India.

Upto FY 2025-26 All other cities and towns in India including Bangalore, Hyderabad, Pune, Ahmedabad, etc.

Section 134 - Deduction for Rent Paid (No HRA Received) (80GG of Income tax act 1961)

If you do NOT receive HRA from your employer but pay rent, you can claim deduction under Section 80GG.

Deduction Amount: Minimum of the following:

  1. ₹5,000 per month (₹60,000 per year)
  2. 25% of total income
  3. Actual rent paid minus 10% of total income

Conditions:

  • You should not receive HRA from employer
  • You, spouse, minor child, or HUF should not own residential accommodation in the city where you reside
  • You must file Form 10BA

Eligibility for HRA Exemption

You Can Claim HRA If:

  • ✅ You are a salaried employee
  • ✅ HRA is a component of your salary
  • ✅ You live in a rented accommodation
  • ✅ You actually pay rent
  • ✅ The house is not owned by you

You Cannot Claim HRA If:

  • ❌ You live in your own house
  • ❌ You don't pay any rent
  • ❌ HRA is not part of your salary structure
  • ❌ You're self-employed (use Section 80GG instead)
  • ❌ House is owned by spouse/parents and no rent proof

HRA Exemption Calculation: Detailed Examples

Example 1: Employee in Metro City (Mumbai)

Salary Details:

  • Basic Salary: ₹50,000 per month
  • Dearness Allowance (DA): ₹5,000 per month
  • HRA Received: ₹20,000 per month
  • Rent Paid: ₹18,000 per month
  • City: Mumbai (Metro)

Calculation:

1. Actual HRA Received ₹20,000
2. Rent paid minus 10% of Basic + DA
₹18,000 - 10% of (₹50,000 + ₹5,000)
= ₹18,000 - ₹5,500 		₹12,500
3. 50% of Basic + DA (Metro city)
50% of (₹50,000 + ₹5,000) 		₹27,500
HRA Exemption (Minimum of above three) ₹12,500/month
Annual HRA Exemption ₹1,50,000
Tax Saved (30% bracket + 4% cess) ₹46,800

Example 2: Employee in Non-Metro City (Jaipur)

Salary Details:

  • Basic Salary: ₹40,000 per month
  • Dearness Allowance (DA): ₹0
  • HRA Received: ₹15,000 per month
  • Rent Paid: ₹12,000 per month
  • City: Jaipur (Non-Metro)

Calculation:

1. Actual HRA Received ₹15,000
2. Rent paid minus 10% of Basic + DA
₹12,000 - 10% of ₹40,000
= ₹12,000 - ₹4,000 		₹8,000
3. 40% of Basic + DA (Non-Metro city)
40% of ₹40,000 		₹16,000
HRA Exemption (Minimum of above three) ₹8,000/month
Annual HRA Exemption ₹96,000
Tax Saved (30% bracket + 4% cess) ₹29,952

Documents Required to Claim HRA Exemption

Rent Receipts

Monthly rent receipts from your landlord. Required for all months you're claiming HRA.

Rent Agreement

Signed rental agreement between you and the landlord showing rent amount and duration.

Landlord's PAN (if annual rent > ₹1 lakh)

If your annual rent exceeds ₹1,00,000, you must provide landlord's PAN card details.

Landlord's Address

Complete address of the landlord as per the rent agreement.

Proof of Payment

Bank statements or cancelled cheques showing rent payment (recommended but not mandatory).

Relationship

.The Income Tax rules makes it mandatory to Dislose the relationship between landlord and tenant for claiming HRA benifit

Important Notes

  • Submit to Employer: Provide these documents to your employer at the start of financial year or when claiming HRA.
  • For ITR Filing: Keep all documents for 6 years in case of Income Tax scrutiny.
  • Annual Rent > ₹1L: Must provide landlord's PAN, otherwise claim will be rejected.
  • Rent Receipts Format: Should include date, amount, period, landlord signature, and revenue stamp (if > ₹5,000/month).

Special Scenarios & FAQs

Yes, you can claim HRA even if you pay rent to your parents.

Requirements:

  • Parents should own the property
  • You must actually pay rent (transfer to their bank account)
  • Rent amount should be reasonable/market rate
  • Parents must show this as rental income in their ITR
  • Maintain proper rent agreement and receipts

Tax Planning Tip: If parents' income is low, the rent they receive may fall under their basic exemption limit, resulting in zero tax for them while you save tax!

Yes, you can claim both!

This is possible when:

  • You own a house in one city (claim home loan benefits)
  • You work in a different city and live in rented accommodation (claim HRA)
  • You must prove that the owned house is in a different city than where you work
  • The owned house should be self-occupied or rented out (different tax implications)

Example: You own a house in Jaipur (claim ₹2L home loan interest deduction) but work in Mumbai and pay rent there (claim HRA exemption).

If rent paid is less than HRA received, the exemption is calculated based on actual rent paid.

Example:

  • HRA Received: ₹20,000/month
  • Rent Paid: ₹10,000/month
  • Your exemption will be based on ₹10,000 rent, not ₹20,000 HRA
  • The remaining ₹10,000 HRA will be fully taxable

Tip: It's better to negotiate higher rent (up to reasonable market rate) to maximize HRA exemption.

Yes, but you can only claim your share of rent.

How to do it:

  • If all roommates are on the rent agreement: Each can claim their share
  • Rent agreement should mention all names
  • Each person gets separate rent receipts for their share
  • If only one person's name is on agreement: Only that person can claim

Example: Total rent ₹30,000, shared by 3 people. Each person can claim ₹10,000/month as rent paid.

Calculate HRA exemption separately for each period:

Example:

  • April-September: Lived in Mumbai (Metro) - 50% rule applies
  • October-March: Lived in Pune (Non-Metro) - 40% rule applies
  • Calculate exemption for 6 months each using respective percentages
  • Add both exemptions for total annual HRA exemption

Documents Needed: Separate rent receipts and agreements for both periods/cities.

NO, HRA exemption is NOT available under the New Tax Regime.

Impact:

  • If you choose New Tax Regime, entire HRA received is taxable
  • This can result in significant higher tax if you pay high rent
  • You must calculate which regime is better for you

Who should choose Old Regime:

  • If your annual HRA exemption is > ₹1 lakh, Old Regime is likely better
  • Combine HRA with other deductions (80C, 80D, home loan) for maximum benefit
  • Use our Tax Regime Calculator to decide

How to Claim HRA Exemption: Step-by-Step

At the Start of Financial Year

  1. Submit rent receipts to your employer
  2. Provide rent agreement copy
  3. Submit landlord's PAN and relationship(if rent > ₹1L/year)
  4. Employer will reduce TDS accordingly

While Filing ITR

  1. Check Form 16 - HRA exemption should be shown
  2. If not claimed from employer, claim in ITR
  3. Fill HRA details in "Salary" section of ITR
  4. Keep all documents for 6 years

Common Mistakes to Avoid

  • ❌ Not submitting landlord's PAN when rent > ₹1 lakh/year
  • ❌ Using cash for rent payment (no proof)
  • ❌ Not maintaining proper rent receipts
  • ❌ Claiming HRA while living in own house
  • ❌ Not declaring rental income if paying rent to family
  • ❌ Choosing New Tax Regime and losing HRA benefit

HRA vs Section 80GG: Quick Comparison

Aspect HRA Exemption Rent Deduction (Section 80GG)
Eligibility Salaried employees receiving HRA Self-employed or salaried NOT receiving HRA
Maximum Benefit No upper limit (calculated based on formula) Maximum ₹60,000 per year
Calculation Minimum of 3 amounts (complex) Minimum of 3 amounts (simpler)
Form Required No specific form Form 10BA required
City Classification Metro: 50%, Non-Metro: 40% No distinction
Landlord PAN Required if rent > ₹1L/year Not required
Home Ownership Can own house in different city Cannot own house in same city

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