HRA Exemption Calculator

Section 10(13A) House Rent Allowance Tax Exemption India

Monthly Basic Salary (₹)

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Monthly Dearness Allowance (DA ₹) (Only DA forming part of retirement benefits)

₹

Monthly HRA Received from Employer (₹)

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Actual Monthly Rent Paid (₹)

₹

Residential City Type:

Metro City (50%)

Delhi, Mumbai, Kolkata, Chennai

Non-Metro (40%)

Bengaluru, Pune, Hyd, others

Salary Presets:

HRA Tax Exemption Result

Section 10(13A)

Total Tax-Free HRA Exemption

$10,000.00 / month

$120,000.00 / year Tax-Exempt

Taxable HRA Portion: $10,000.00 / mo

Annual Taxable HRA: $120,000.00 / yr

Est. Tax Savings (30% Slab): $37,440.00 / yr

Tax-Exempt Ratio: 50% of HRA is Tax-Free

Section 10(13A) 3-Condition Rule 2A Breakdown

HRA Exemption is statutory calculated as the lowest of the following 3 amounts:

Condition 1

Actual HRA Received

Total HRA paid by your employer.

$20,000.00 / mo

$240,000.00 / year

Condition 2

50% of (Basic + DA)

50% for Metro / 40% for Non-Metro cities.

$25,000.00 / mo

$300,000.00 / year

Condition 3

Rent Paid − 10% of Salary

Excess of rent paid over 10% of (Basic + DA).

$10,000.00 / mo

$120,000.00 / year

Estimated Annual Tax Savings by Tax Bracket (Old Regime)

Income Tax Bracket / Slab	Marginal Tax Rate (+ 4% Cess)	Annual Tax Deductible	Net Tax Saved / Year
High Income (> ₹10 Lakhs)	30% + 4% = 31.2%	$120,000.00	$37,440.00
Middle Income (₹5L - ₹10L)	20% + 4% = 20.8%	$120,000.00	$24,960.00
Lower Bracket (₹2.5L - ₹5L)	5% + 4% = 5.2%	$120,000.00	$6,240.00

Understanding HRA Tax Exemption under Section 10(13A)

House Rent Allowance (HRA) is a critical component of salaried employee remuneration packages across India. Designed to help employees cover the cost of rented accommodation, HRA enjoys special tax exemption privileges under Section 10(13A) of the Income Tax Act, 1961, read in conjunction with Rule 2A of the Income Tax Rules.

How Section 10(13A) Exemption is Calculated

The income tax law mandates that the tax-exempt amount of HRA is always the least of the following three legal benchmarks:

Actual HRA Received: The exact amount of House Rent Allowance received by the employee from the employer during the financial year.
Salary Percentage Limit: 50% of Salary if the rented residence is in a Metro city (Delhi, Mumbai, Kolkata, Chennai), or 40% of Salary if residing in any other city.
Rent in Excess of 10% of Salary: Actual rent paid for the residential accommodation minus 10% of Salary for the applicable period.

Note on Definition of "Salary": For HRA calculations, Salary means

Basic Salary + Dearness Allowance (forming part of retirement benefits) + Commission based on a fixed percentage of turnover

. Other allowances like Special Allowance, Medical Allowance, or Performance Bonus are excluded.

Metro vs Non-Metro City Classification

The Income Tax Department categorizes Indian cities into two distinct groups for condition #2:

City Category	Eligible Cities	Applicable Percentage
Metro Cities	Delhi, Mumbai, Kolkata, Chennai (Municipal Limits)	50% of Basic + DA
Non-Metro Cities	All other cities (Bengaluru, Hyderabad, Pune, Ahmedabad, Gurgaon, Noida, Jaipur, etc.)	40% of Basic + DA

Important Rules, Landlord PAN & Documentation

Mandatory Landlord PAN: If your total rent payment exceeds ₹1,00,000 per financial year (approx ₹8,333 per month), you must furnish your landlord's PAN to your employer for TDS deduction. If the landlord does not have a PAN, a signed declaration (Form 60) along with their name and address is required.
TDS on Rent (Section 194-IB): If you pay rent exceeding ₹50,000 per month, you are legally required to deduct TDS at 5% (or 2% during specific relief periods) on the rent paid and deposit it with the government using Form 26QC.
Paying Rent to Parents: If you live in your parents' house, you can legitimately pay them monthly rent via online banking, execute a rent agreement, and claim HRA tax exemption. Your parents must include this rental income in their ITR.
Old vs New Tax Regime: HRA exemption is NOT available under the New Tax Regime (Section 115BAC). You must choose the Old Tax Regime to claim HRA tax benefits.

Frequently Asked Questions (FAQs)

Under Section 10(13A) and Rule 2A of the Indian Income Tax Act, the tax-exempt HRA is the MINIMUM of the following three conditions:
1. Actual HRA received from your employer.
2. 50% of (Basic Salary + DA) for metro cities (Delhi, Mumbai, Kolkata, Chennai) OR 40% of (Basic Salary + DA) for non-metro cities.
3. Actual Rent Paid minus 10% of (Basic Salary + DA).
The lowest of these three amounts is completely exempt from income tax, and the remaining balance of HRA received is added to your taxable salary income.

For income tax purposes, Metro cities are strictly defined as Delhi, Mumbai, Kolkata, and Chennai, where you can claim up to 50% of Basic Salary + DA under condition 2. In all other cities (including major IT hubs like Bengaluru, Hyderabad, Pune, Gurgaon, and Noida), the limit is 40% of Basic Salary + DA.

You can claim HRA up to ₹3,000 per month (₹36,000 per year) without submitting rent receipts to your employer. However, for higher rent amounts, employers require monthly rent receipts and rental agreements. If your annual rent paid exceeds ₹1,00,000 (₹8,333/month), submitting the Landlord’s PAN is legally mandatory.

Assuming a Basic Salary of ₹50,000/month, receiving ₹20,000/month HRA, and paying ₹15,000/month Rent in a Metro city:
• Condition 1 (Actual HRA): ₹20,000/month
• Condition 2 (50% of Basic): 50% of ₹50,000 = ₹25,000/month
• Condition 3 (Rent - 10% Basic): ₹15,000 - ₹5,000 = ₹10,000/month
The minimum is ₹10,000/month (₹1,20,000/year), which is your Tax-Free HRA Exemption. The remaining ₹10,000/month is taxable.

No. HRA tax exemption under Section 10(13A) is only available under the Old Tax Regime. Under the New Tax Regime (Section 115BAC), all allowances including HRA, LTA, and Section 80C deductions are forgone in exchange for lower slab tax rates and a flat ₹75,000 Standard Deduction.

Yes! You can claim both HRA exemption under Section 10(13A) and Home Loan deductions (Section 24(b) for interest up to ₹2 Lakhs and Section 80C for principal repayment up to ₹1.5 Lakhs) if your owned home is in a different city or you live in rented accommodation due to employment distance.

Yes, perfectly legal! You can pay rent to your parents and claim HRA exemption provided: (1) Your parents are the legal owners of the property, (2) You execute a formal rent agreement and transfer rent via bank transfer, and (3) Your parents declare this rental income in their respective Income Tax Returns (ITR).