HRA Calculator

What is HRA?

House rent allowance (HRA) is the part of your salary your employer pays towards the cost of renting a home. If you live in rented accommodation, part or all of it can be exempt from tax under the old tax regime.

The exempt amount is not simply the HRA you receive or the rent you pay. It is worked out using three limits, and only the lowest is tax-free.

How is the HRA exemption calculated?

The tax-free part of your HRA is the lowest of these three amounts for the year:

• The HRA you actually receive from your employer.
• The rent you pay, minus 10% of your salary.
• 50% of your salary if you live in a metro city, or 40% if you live elsewhere.

For example, with a basic salary of ₹50,000 a month, HRA of ₹20,000 a month and rent of ₹18,000 a month in a metro city, the three amounts for the year are ₹2,40,000, ₹1,56,000 and ₹3,00,000. The lowest, ₹1,56,000, is tax-free, and the remaining ₹84,000 of HRA is taxed as salary.

What counts as salary for HRA?

• Your basic salary.
• Dearness allowance (DA), if it counts towards your retirement benefits.
• Commission paid as a fixed percentage of the turnover you achieve.

Other allowances, bonuses and perks are not included. Check your salary slip for your basic pay and DA.

Metro and non-metro cities

For many years, only Delhi, Mumbai, Kolkata and Chennai counted as metro cities for HRA, earning the higher 50% limit. The list for your tax year depends on the current income tax rules, so check it before you claim; if your city is not on it, choose Other city in the calculator.

How to claim your HRA exemption

• Give your employer your rent receipts or rent agreement when they ask for investment proofs.
• If your rent is more than ₹1 lakh in a year, share your landlord's PAN as well.
• You can pay rent to your parents if they own the house, and they must show it as their income. Rent paid to your spouse does not usually qualify.
• If you missed telling your employer, you can still claim the exemption when you file your income tax return.

HRA under the old and new tax regimes

The HRA exemption is available only under the old tax regime. Under the new regime, your full HRA is taxable, but the tax rates are lower and there is a higher standard deduction. If you pay high rent, compare both regimes before choosing.

If your salary does not include HRA at all, the old regime also offers a separate, smaller deduction for rent you pay, subject to its own conditions.

Frequently asked questions