HRA Exemption Calculator
Exempt house rent allowance is the minimum of three components (metro vs non-metro). For assessment-year rules, confirm with a tax advisor.
Estimate exempt HRA under the classic three tests—actual allowance, metro/non-metro percentage of Basic + DA, and rent paid minus 10% of salary—to sanity-check payslip splits ahead of proof submission to your employer or Section 10(13A) discussions.
Salary & rent
Monthly figures in INR.
HRA exemption
Minimum of (1) actual HRA, (2) % of salary, (3) rent − 10% salary.
Components
- Actual HRA: ₹30,000
- 50% of salary: ₹30,000
- Rent − 10% salary: ₹19,000
Three statutory tests (relative scale)
- Actual HRA received₹30,000
- 50% of (Basic + DA)₹30,000
- Rent paid − 10% of salary₹19,000
HRA exemption formula (Section 10(13A) style)
For salaried employees receiving HRA and paying rent, Indian tax law compares three amounts and allows the smallest as exempt—subject to actual rules and employer reporting.
Exempt HRA
Exempt = min( Actual_HRA_received, Metro ? 50% : 40% of (Basic + DA), Rent_paid − 10% of (Basic + DA) )
- Metro
- Large city classification per notified rules—toggle affects the 50% vs 40% test.
- Basic + DA
- Salary components forming the denominator in percentage tests.
If any component is negative (e.g. very low rent vs high salary), the third test floors at zero in our implementation. Remaining HRA on your payslip may be taxable.
Worked example: Bengaluru-based salaried employee
A typical mid-level IT professional drawing ₹12 LPA, paying rent in a metro city. The numbers below show how each of the three statutory tests is computed and which one ends up binding.
- Basic salary (annual)
- ₹6,00,000
- HRA received (annual)
- ₹2,40,000
- Rent paid (₹22,000 × 12)
- ₹2,64,000
- City
- Bengaluru (metro)
Test 1 — actual HRA received: ₹2,40,000. Test 2 — 50% of basic (metro): ₹3,00,000. Test 3 — rent paid minus 10% of basic: ₹2,64,000 − ₹60,000 = ₹2,04,000. The exempt HRA is the minimum of the three: ₹2,04,000. The remaining ₹36,000 of HRA is added to taxable salary income.
For non-metro cities (Chandigarh, Pune, Hyderabad and so on), Test 2 uses 40% of basic instead of 50%. Note: HRA exemption only applies under the old tax regime — the new regime (default since FY 2023-24) does not allow HRA, so this calculation is only relevant if you have explicitly opted out of the new regime.
Key terms
- HRA
- House Rent Allowance—a salary component some employers offer toward rental cost.
- Basic salary
- Core fixed pay before variable allowances; often the base for HRA percentage tests.
- Dearness allowance (DA)
- Inflation-linked pay element; when it counts as salary for HRA depends on employer/tax treatment.
- Metro city
- Notified cities where the 50%-of-salary test applies instead of 40%.
- Taxable HRA
- Portion of HRA not covered by exemption—added back to salary income in a full return.
Benefits
- See which of the three statutory tests binds first for your rent and salary mix.
- Understand why higher rent or metro status changes exemption.
- Quick what-if when salary structure or rent changes mid-year.
FAQ
Which amount is tax-free?▼
The exempt portion of HRA is the minimum of three tests: actual HRA received, a percentage of (Basic + DA) depending on metro vs non-metro city, and rent paid minus 10% of salary. The tool shows all three components.
Do I need rent receipts?▼
Employers and assessing officers may ask for rent agreements or receipts depending on rent amount and employer policy. The calculator only does the arithmetic.
What if I live in my own house?▼
HRA exemption generally does not apply when you do not pay rent for the accommodation you occupy—confirm specifics with a tax advisor.
Is DA always included in salary for HRA?▼
Rules refer to salary for this purpose; many payrolls include dearness allowance in the base used for HRA tests when DA forms part of retirement benefits—enter what your employer uses.