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HRA Calculator

Calculate your exact House Rent Allowance (HRA) exemption and see which rule limits your tax savings.

Salary Structure

₹
₹
Non-Metro (40%)

Exempt HRA (annual)

₹1,92,000
Taxable: ₹48,000
Approx Tax Saved: ₹59,904

Old vs New Tax Regime Impact

You can only claim this ₹1,92,000 exemption if you opt for the Old Tax Regime.

Old Regime: Available
New Regime: ₹0 Exemption

How is this calculated?

1
Actual HRA Received
₹2,40,000
2
Rent Paid - 10% of Basic
Annual Rent Paid:₹3,00,000
10% of Basic Salary:₹48,000
Difference:₹2,52,000
₹2,52,000Eligible
3
40% of Basic Salary (Non-Metro)
₹1,92,000

Rule 3 is the Lowest

The Income Tax Act mandates that your HRA exemption is strictly the lowest of the three rules above. Therefore, ₹1,92,000 becomes your tax-free exempt amount, saving you approximately ₹59,904 in income tax.

What is HRA?

House Rent Allowance (HRA) is a salary component paid by employers to employees to meet accommodation expenses. Under Section 10(13A) of the Income Tax Act, 1961, salaried individuals can claim an exemption on HRA if they live in rented accommodation.

Crucial Note: HRA exemption is ONLY available if you opt for the Old Tax Regime. Under the New Tax Regime, HRA exemption is completely disallowed, regardless of how much rent you pay.

The HRA Exemption Formula

The tax-exempt portion of your HRA is calculated as the minimum of the following three conditions:

  • 1
    Actual HRA Received from your employer.
  • 2
    Rent Paid minus 10% of Basic Salary (including DA if applicable).
  • 3
    50% of Basic Salary (if you live in a Metro city) OR 40% of Basic Salary (if you live in a Non-Metro city).

Required Documents for HRA

To claim your HRA exemption during your investment declaration or ITR filing, you need:

  • Valid Rent Agreement between you and the landlord.
  • Monthly Rent Receipts (at least for the first and last month).
  • Landlord's PAN Card: Mandatory if your annual rent exceeds ₹1,00,000 (i.e., more than ₹8,333 per month).
  • Proof of payment (bank transfers are preferred over cash to avoid scrutiny).

Metro vs Non-Metro Rules

For Income Tax purposes, ONLY the following 4 cities are considered "Metro" (eligible for 50% Basic):

  • 🏢 New Delhi
  • 🏢 Mumbai (Bombay)
  • 🏢 Kolkata (Calcutta)
  • 🏢 Chennai (Madras)
* Note: Major IT hubs like Bangalore, Pune, and Hyderabad are classified as Non-Metro (40% rule) for HRA calculations.

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Frequently Asked Questions

Can I pay rent to my wife and claim HRA?

Legally, husband and wife are considered a single unit for tax purposes. Paying rent to a spouse to claim HRA is heavily scrutinized by the Income Tax Department and often rejected. It is generally not advised.

Can I claim HRA for rent paid to my parents?

Yes! You can claim HRA by paying rent to your parents, provided the property is owned by them. You must transfer the rent to their bank account and they must declare this rental income in their own ITR. This is a highly effective way to save tax if your parents fall in a lower tax slab than you.

I own a home in another city, but live on rent. Can I claim HRA?

Yes. If you own a house in City A (and are paying a home loan EMI) but work and live on rent in City B, you can claim both HRA exemption and Home Loan interest deduction (Section 24) simultaneously.

Can my HRA exemption exceed my rent paid?

No. The formula mathematically caps your exemption. Under Rule 2, the exemption is calculated as (Rent Paid - 10% of Basic). Because of the subtraction, your exemption will always be strictly less than the actual rent you paid.

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