HRA Calculator

HRA Calculator

Use this HRA calculator to find how much of your house rent allowance is tax free. Enter your basic salary, DA, HRA received and rent paid to get the exact exempt and taxable HRA amount.

What Is HRA Exemption?

House Rent Allowance, or HRA, is the part of your salary your employer pays towards your rent. A portion of it is not taxed, and that tax free portion is the HRA exemption.

The exemption is not automatic. You must actually pay rent, and the amount depends on your salary, the rent and your city. The rest of the HRA is added to your taxable salary.

This exemption comes from Section 10(13A) of the Income Tax Act. The method of calculating it is laid down in Rule 2A, which is exactly what this calculator follows.

Salary for this calculation means your basic pay plus dearness allowance. One condition applies to DA: only the part of DA that forms part of your retirement benefits is counted. Bonuses, commissions and other allowances are not counted here. The same basic plus DA figure is also the base on which gratuity is calculated — you can check that amount on our Gratuity Calculator.

HRA Exemption Formula

The exempt amount is the lowest of three values, calculated on yearly figures. These are the three tests set by Rule 2A, and this is the rule the calculator above applies.

Test 1 is simple. The exemption can never be more than the HRA your employer actually pays you in the year.

Test 2 removes 10% of your salary from the rent. The idea is that some part of rent is your normal living cost, and only the extra part counts.

Test 3 sets the ceiling by city. In metro cities the ceiling is 50% of salary, and in all other cities it is 40% of salary.

Metro Cities for HRA in FY 2026-27

This is where older calculators still mislead people. Till FY 2025-26, only four cities counted as metro for HRA. From FY 2026-27 the list has eight cities.

Bengaluru, Hyderabad, Ahmedabad and Pune are the four new additions. If you pay rent in one of these cities, check your claim with the 50% limit this year.

The city that matters is the city where you live on rent, not the city where your employer or head office is located.

HRA Calculation Example

Take a salaried employee in a metro city with a basic salary of ₹50,000 per month, HRA of ₹20,000 per month and rent of ₹18,000 per month.

So ₹13,000 per month of his HRA stays tax free, and ₹7,000 per month is taxable. Notice how the rent decides the final figure in most real cases, through Test 2.

Non-Metro Example

Now take an employee in a non-metro city with a basic salary of ₹40,000 per month, HRA of ₹16,000 per month and rent of ₹12,000 per month. Only the city limit changes, from 50% to 40%.

Here ₹8,000 per month stays tax free and ₹8,000 per month is taxable. In most non-metro cases too, Test 2 decides the result, because rent is usually well below the 40% ceiling.

Rules and Conditions for Claiming HRA

Old regime only. HRA exemption is available only under the old tax regime. Under the new regime, the full HRA is taxable. Which regime suits you also depends on your other income — for example the tax on your mutual fund gains, which you can check on our Mutual Fund Tax Calculator.

You must pay rent. The claim needs real rent payment for the house you live in. Keep rent receipts and a rent agreement as proof.

Landlord PAN above ₹1 lakh. If your yearly rent is above ₹1,00,000, your landlord’s PAN is required. Without it, the employer can refuse the claim.

Own house in another city. If your own house is in a different city and you live on rent near work, HRA and home loan benefits can be claimed together.

Both spouses. A husband and wife cannot both claim exemption on the same rent. Only the one who actually pays the rent can claim it.

Documents Needed to Claim HRA

Rent receipts. Take a signed receipt from your landlord for every month, or at least for the months you claim. The receipt should show the rent amount, the landlord name and the house address.

Rent agreement. A written agreement on stamp paper is the strongest proof of the arrangement. Employers usually ask for it along with the receipts at the time of declaration.

Landlord PAN. If your yearly rent is above ₹1,00,000, the landlord PAN is compulsory. If the landlord has no PAN, take a signed declaration from them instead.

Bank transfer proof. Pay rent through bank transfer or UPI, not cash. The transfer trail supports your claim if the employer or the tax department asks a question later.

Common HRA Mistakes

Using the full CTC as salary. The calculation uses only basic pay plus DA. Putting your full CTC or gross salary into Test 3 inflates the limit and gives a wrong, higher exemption.

Assuming the full HRA is tax free. Only the lowest of the three Rule 2A tests is exempt. In most real cases the exempt part is much smaller than the HRA received.

Claiming without actually paying rent. Living in your own house, or showing rent that was never paid, makes the claim invalid. Such claims are rejected and can attract a penalty.

Using the old four-city metro list. From FY 2026-27, eight cities get the 50% limit. Claiming 40% in Bengaluru, Hyderabad, Ahmedabad or Pune leaves money on the table.

Forgetting the regime check. HRA exemption exists only in the old regime. High-rent employees should compare both regimes before filing instead of assuming the new regime is always better. If you also sold shares or property during the year, include that tax in the comparison — our Capital Gains Tax Calculator gives you that figure.

HRA for Government Employees

For government staff, HRA is a fixed percentage of basic pay, decided by the class of the posting city. The exemption calculation on this page is separate and is used at the time of tax filing.

If you want the expected allowance itself after the pay revision, use our 8th Pay Commission HRA Calculator to see the projected HRA on the new basic pay.

Note: This income tax HRA calculator gives an estimate for salaried employees in India under the old regime. If you changed jobs or cities mid-year, calculate each period separately and add the results.

HRA Calculator (FAQ)