Calculate House Rent Allowance (HRA) Tax Exemption

What is HRA and How is Exemption Calculated?

House Rent Allowance (HRA) is an integral compensation component disbursed by employers to meet rental accommodation expenses. Governed by Section 10(13A) read with Rule 2A of the Income-tax Rules, 1962 (under the Income-tax Act, 1961), salaried employees residing in rented premises can claim deductions against taxable income under the Old Tax Regime.

Statutory tax-exempt HRA is calculated as the lowest (minimum) of the following three verified statutory limits:

How to Use the HRA Calculator

1. Select Tax Regime: Choose between the Old Tax Regime (HRA eligible) and the New Tax Regime (Section 115BAC of the Income-tax Act, 1961, where HRA exemption is unavailable).
2. Enter Basic Pay & Qualifying Allowances: Input your annual basic salary, qualifying Dearness Allowance (DA forming part of retirement benefits), and any turnover-based commission.
3. Enter HRA & Rent Paid: Input annual HRA received, actual rent paid, and your rental tenure in months.
4. Select City Classification: Indicate if you reside in the four official metros (Delhi, Mumbai, Kolkata, Chennai) or other locations across India.
5. Review Exempt & Taxable Allowance: Instantly view the least of the three statutory rules, total tax-exempt HRA, taxable HRA, and compliance alerts.

Eligibility Criteria for HRA Exemption

City Eligibility Rules: Metro (50%) vs. Non-Metro (40%)

Official Income Tax Department guidance specifies that only four metropolitan cities qualify for the 50% eligible salary ceiling under Rule 2A(h). Claims that other cities qualify for the 50% limit are contrary to current statutory income tax law. All other cities across India (including Bengaluru, Hyderabad, Pune, and Ahmedabad) remain subject to the 40% ceiling.

*Source: Official Income Tax Department guidelines, Rule 2A of the Income-tax Rules. Primary reference: Income Tax India

Documents & Statutory Disclosures Required for HRA Claim

• Registered Tenancy Agreement: Valid rental contract executed with your landlord for the residential tenancy period.
• Rent Receipts: Signed rent receipts bearing revenue stamps where payment is transacted in cash.
• Mandatory Landlord PAN Disclosure: Under CBDT Circular No. 8/2013, if annual rent exceeds ₹1,00,000 (~₹8,333/month), disclosing the landlord's PAN is legally mandatory. If the landlord does not have a PAN, a signed declaration and Form 60 must be provided.
• TDS Compliance on High Rent (Section 194-IB): Under Section 194-IB of the Income-tax Act, if monthly rent paid by an individual or HUF exceeds ₹50,000, tenant must deduct 2% TDS (as revised under the Finance Act, 2024, effective 1 October 2024) and file Form 26QC.
• Bank Payment Records: Digital bank statements or electronic UPI transfer records corroborating actual rent payments.