HRA Exemption Calculator India – Calculate Tax-Free HRA Accurately

House Rent Allowance (HRA) is one of the most misunderstood components of a salary in India.

Every year, salaried employees search for:

• How much HRA is exempt from tax?

• Why is my HRA exemption lower than expected?

• What is the difference between metro and non-metro HRA?

• Which HRA rule applies in my case?

This page answers all those questions in one place.

Using our HRA Exemption Calculator, you can instantly calculate:

• how much of your HRA is tax-free

• how much becomes taxable

• why a particular exemption amount is applied

No confusion. No assumptions. No need to cross-check elsewhere.

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What Is HRA (House Rent Allowance)?

House Rent Allowance (HRA) is a salary component paid by employers to help employees meet rental housing expenses.

If you:

• live in a rented house, and

• receive HRA as part of your salary

then a portion of your HRA can be exempt from income tax, subject to conditions.

This exemption is governed by Section 10(13A) of the Income-tax Act and related rules notified by the Income Tax Department.

Who Can Claim HRA Exemption?

You can claim HRA exemption if all three conditions are met:

1. You are a salaried employee

2. You receive HRA as part of salary

3. You pay rent for residential accommodation

If you own a house and do not pay rent, HRA exemption is not available (even if HRA is shown in salary).

How HRA Exemption Is Calculated (Rule Explained)

HRA exemption is not arbitrary.

As per law, HRA exemption is the lowest of the following three values:

1️⃣ Actual HRA Received

This is the HRA amount shown in your salary structure.

2️⃣ Rent Paid − 10% of Basic Salary

If rent paid is low compared to basic salary, exemption reduces.

Formula:

If this value is negative, it is taken as zero.

3️⃣ Percentage of Basic Salary

Depends on your city of residence:

👉 Final HRA Exemption = Lowest of the above three values

Any HRA above this amount becomes taxable.

How This HRA Exemption Calculator Works

Our calculator applies the exact legal formula, without shortcuts.

Step 1: Enter Basic Salary

Used to compute:

• 10% threshold

• 40% / 50% limit

Step 2: Enter HRA Received

Maximum possible exemption cannot exceed this amount.

Step 3: Enter Rent Paid

Directly affects exemption under Rule 2.

Step 4: Select City Type

Metro or Non-Metro changes the percentage limit.

Step 5: View Results

You instantly see:

• Exempt HRA

• Taxable HRA

• All three rule values

• Clear explanation of which rule applied and why

This explanation layer is what most calculators miss.

Example 1: Non-Metro City (Balanced Case)

Inputs

• Basic Salary: ₹6,00,000

• HRA Received: ₹2,40,000

• Rent Paid: ₹3,00,000

• City: Non-Metro

Rule Values

• HRA received: ₹2,40,000

• Rent − 10% of basic: ₹2,40,000

• 40% of basic: ₹2,40,000

Result

• Exempt HRA: ₹2,40,000

• Taxable HRA: ₹0

All three values match, so full HRA is exempt.

Example 2: Metro City (High Basic Salary Case)

Inputs

• Basic Salary: ₹15,00,000

• HRA Received: ₹2,40,000

• Rent Paid: ₹3,00,000

• City: Metro

Rule Values

• HRA received: ₹2,40,000

• Rent − 10% of basic: ₹1,50,000

• 50% of basic: ₹7,50,000

Result

• Exempt HRA: ₹1,50,000

• Taxable HRA: ₹90,000

Here, rent minus 10% of basic becomes the limiting factor.

Metro vs Non-Metro HRA – What’s the Difference?

The only difference is the percentage of basic salary used:

• Metro: 50% of basic

• Non-Metro: 40% of basic

Everything else remains the same.

This difference matters only when the percentage rule becomes the lowest value.

Common HRA Mistakes Employees Make

❌ Assuming full HRA is tax-free
❌ Ignoring the 10% of basic rule
❌ Confusing city of employment with city of residence
❌ Claiming HRA without paying rent
❌ Not understanding why exemption changes year to year

Our calculator eliminates all of these errors.

How HRA Affects Your Income Tax

• Exempt HRA reduces your taxable salary

• Taxable HRA is added back to income

This directly impacts:

• tax payable under the Old Regime

• your choice between Old vs New Regime

That’s why HRA calculation should always be done before final tax planning.

Important Clarification (Very Common Confusion)

CTC includes employer PF & gratuity, which are not paid as cash salary.

Similarly:

• HRA exemption depends on actual rent paid, not CTC

• Higher CTC does not guarantee higher HRA exemption

Frequently Asked Questions (FAQ)

Is HRA exemption available in the New Tax Regime?

No.
HRA exemption is not available under the New Tax Regime.

Can I claim HRA if I live with parents?

Yes, if:

• parents own the house

• you actually pay rent

• rent is reflected in records

What if rent paid is very low?

HRA exemption may reduce to zero due to the 10% of basic rule.

Is rent receipt mandatory?

Yes, especially if annual rent exceeds ₹1 lakh.

Is rent receipt mandatory?

Yes, especially if annual rent exceeds ₹1 lakh.

Why Use This HRA Exemption Calculator?

✔ Law-accurate calculation
✔ Rule-wise transparency
✔ No hidden assumptions
✔ Handles edge cases correctly
✔ Explains why a result appears
✔ Works seamlessly with Salary & Tax tools

This makes it a final-answer tool, not just an estimator.

Conclusion

HRA exemption is one of the biggest tax-saving opportunities for salaried employees — but only when calculated correctly.

This HRA Exemption Calculator gives you:

• clarity

• accuracy

• confidence

Use it before:

• choosing a tax regime

• filing your return

• negotiating salary structure

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Disclaimer

This calculator provides indicative HRA exemption based on current income tax rules. Actual exemption may vary depending on individual circumstances, documentation, and assessment by tax authorities. For filing purposes, consult a qualified tax professional.