HRA Exemption Calculator: Pay Tax Only on What You Must

House Rent Allowance can sharply cut your taxable salary if you live in rented accommodation. Our HRA exemption calculator applies the three-limit rule: exemption is the minimum of actual HRA received, 50% of basic plus DA in metros (40% elsewhere), and annual rent paid minus 10% of basic plus DA. The balance HRA is taxable.

The three limits explained

• Actual HRA: you can never exempt more than your employer paid you.
• Salary cap: 50% of basic plus DA for Delhi, Mumbai, Chennai and Kolkata; 40% for all other cities.
• Rent cap: rent paid minus 10% of basic plus DA, rewarding those who pay high rent relative to salary.

How to maximise exemption

Collect rent receipts and the landlord's PAN for rent above Rs 1 lakh per year, split rent correctly if sharing accommodation, and update your city type after a transfer since metro status changes the cap by 10% of salary. Salaried taxpayers in the old regime benefit most, because the new regime offers no HRA exemption.

Example

Basic Rs 6 lakh, HRA Rs 2.4 lakh, rent Rs 3 lakh in a metro: salary cap is Rs 3 lakh, rent cap is Rs 2.4 lakh, so exemption is Rs 2.4 lakh and taxable HRA is zero. Drop the rent to Rs 1.8 lakh and exemption falls to Rs 1.2 lakh.