HRA Exemption Calculator

When this applies

• You receive HRA and pay rent, and want to know how much is exempt.
• You are comparing the old and new regimes and need the HRA figure.
• You are filling in the HRA details in your return or your employer's declaration.
• You are checking why your exemption is lower than the rent you pay.

Basic INR 6,00,000, HRA INR 2,40,000, rent INR 3,00,000, metro

1. 1HRA actually received = INR 2,40,000.
2. 2Rent paid minus 10% of basic = 3,00,000 - 60,000 = INR 2,40,000.
3. 350% of basic (metro) = INR 3,00,000.
4. 4Exempt = the least of the three = INR 2,40,000.
5. 5Taxable HRA = 2,40,000 - 2,40,000 = nil.

The whole HRA of INR 2,40,000 is exempt and none of it is taxable.

What this calculator does

Work out how much of your house rent allowance is exempt from tax. The exemption is the least of three amounts, and this calculator shows all three so you can see which one is actually limiting the exemption rather than guessing.

How this is calculated

The exempt part of HRA is the smallest of three figures: the HRA you actually received, the rent you paid minus 10% of your basic salary, and 50% of basic if you live in a metro city or 40% if you do not. The smallest of the three is exempt and the remainder of the HRA is taxable. Because it is a least-of-three test, raising your rent only helps until one of the other two limits takes over.

The formula

Exempt = min(HRA received, rent − 10% of basic, 50%/40% of basic)

Common mistakes to avoid

• Assuming the full HRA is exempt

  The exemption is the least of three figures. Where the rent is low or the HRA is high, only part of it is exempt.

• Using 50% outside a metro

  Only Delhi, Mumbai, Kolkata and Chennai use the 50% limit. Elsewhere it is 40%, so using 50% overstates the exemption.

• Claiming HRA under the new regime

  The exemption is not available under the new regime. Claiming it there is a mismatch with the return.

• Claiming rent without evidence

  The exemption rests on rent actually paid. Landlord details and proof of payment are commonly asked for.

Frequently asked

How is the HRA exemption calculated?

As the least of three amounts: the HRA received, rent paid minus 10% of basic salary, and 50% of basic in a metro city or 40% elsewhere.

Which cities count as metro for this purpose?

Delhi, Mumbai, Kolkata and Chennai. Every other city uses the 40% limit.

Is the HRA exemption available under the new regime?

No. The exemption applies under the old regime. If you are taxed under the new regime, the HRA is fully taxable.

What if I pay rent to a family member?

Rent paid to a family member can qualify where the arrangement is genuine, the rent is actually paid, and the recipient declares it as income. Keep the evidence of payment.

What if my rent is more than my HRA?

The exemption is capped by the least of the three figures, so rent above the limit does not increase it further. The excess rent does not become exempt.