India HRA (House Rent Allowance) Exemption Calculator

HRA is a salary component paid by employers to help employees with rented-housing costs. Under Section 10(13A) of India’s Income-tax Act, 1961, part or all of HRA can be excluded from taxable income if the employee actually lives in rented housing, pays rent, and receives HRA from the employer. If the employee lives in their own house or pays no rent, the entire HRA is taxed as salary.

Under Rule 2A, the exemption is the LOWEST of three amounts: (a) actual HRA received from the employer during the period; (b) rent paid minus 10% of salary; (c) 50% of salary if the rented house is in one of eight metro cities — Delhi, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Pune, and Ahmedabad (eight cities since FY 2026-27 under the Income Tax Rules 2026) — or 40% of salary for other cities. The difference between HRA received and the exempted amount is taxed as part of salary. If salary, rent, or city changes mid-year, the computation is done per period.

For HRA purposes, “salary” covers basic salary plus dearness allowance (DA) forming part of retirement benefits, plus commission computed as a fixed percentage of turnover if any. Bonuses, special allowances, leave travel allowance, perquisites, and employer provident-fund contributions are excluded — the formula does not use total CTC (cost to company).

Since FY 2026-27 (1 April 2026, the current tax year), eight cities count as metros with the 50% limit: Delhi, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Pune, and Ahmedabad (under the Income Tax Rules 2026). For earlier tax years — including ITR AY 2026-27 (tax year FY 2025-26) being filed now — only four cities count as metros: Delhi, Mumbai, Kolkata, and Chennai; all other cities use the 40% limit. City rules can change; last verified 9 October 2026.

Employees generally submit rent receipts and a declaration to the employer via Form 124 (replacing Form 12BB since 1 April 2026 under the Income Tax Rules 2026). Since that date, if the landlord is a relative, the relationship must be disclosed in Form 124. If total rent paid in a tax year exceeds ₹1,00,000 (about ₹8,333 per month), the landlord’s PAN generally must be reported. A written rent agreement helps keep records complete in case of scrutiny.

No. The HRA exemption under Section 10(13A) is only available if the taxpayer opts for the old tax regime. Since FY 2023-24, the new regime is the default option, and it does not allow the HRA exemption along with several other common exemptions and deductions. Compare total tax under both regimes before choosing.

This calculator implements the Section 10(13A) formula with rules in force as of 9 October 2026; results are an educational estimate, not tax advice. Real cases can differ due to mid-year salary or city changes, the salary-component definitions on your payslip, or regulatory changes after that date. For tax decisions, consult a licensed tax professional.