HRA Exemption Calculator

Calculate Your Tax-Free House Rent Allowance for FY 2025-26

Calculate HRA Tax Benefit

Include Basic Pay and Dearness Allowance only.
Total HRA received from employer in FY.
Total rent paid to landlord for the year.
Select Metro only for 4 main metros.
HRA Exemption Calculation (Section 10(13A))
1. Actual HRA Received: ₹ 0
2. 50% / 40% of Basic Salary: ₹ 0
3. Rent Paid - 10% of Basic Salary: ₹ 0
Exempted HRA (Tax Free): ₹ 0
Taxable HRA (Added to Income): ₹ 0

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Comprehensive Guide to HRA Exemption (FY 2025-26)

House Rent Allowance (HRA) is one of the most significant components of a salaried individual's pay structure in India. While it is a taxable allowance, the Income Tax Act provides a deduction under Section 10(13A), allowing employees to save tax on the rent they pay. As we move into Financial Year 2025-26 (Assessment Year 2026-27), understanding these rules is crucial for tax planning.

Important Note for FY 2025-26: HRA Exemption is available ONLY under the Old Tax Regime. If you opt for the New Tax Regime (default from FY 23-24 onwards), you cannot claim HRA exemption; your entire HRA will be taxable.

How is HRA Exemption Calculated?

The exemption amount is calculated based on the "Least of the Three" rule. The lowest of the following three figures is allowed as a tax exemption:

  1. Actual HRA Received: The total amount paid by your employer as HRA.
  2. Rent Paid over 10% of Basic Salary: Calculated as: Total Rent Paid - (10% of Basic Salary + DA).
  3. 50% or 40% of Basic Salary:
    • 50% for Metro Cities (Delhi, Mumbai, Kolkata, Chennai).
    • 40% for Non-Metro Cities (Bangalore, Hyderabad, Pune, Gurgaon, and all others).

Note: "Salary" here implies Basic Pay + Dearness Allowance (DA). It does not include other allowances or bonuses.

Metro vs. Non-Metro City Classification

A common confusion among taxpayers is the classification of "Metro" cities for HRA purposes. The Income Tax Department strictly defines Metro cities as:

Documents Required to Claim HRA

To claim this exemption, you must provide proof of rent payment to your employer (Form 12BB) or while filing your ITR.

Frequently Asked Questions (FAQ)

1. Can I claim HRA if I live in my own house?

No. You must be living in a rented accommodation and actually paying rent to claim HRA exemption. If you live in your own house, the entire HRA received is taxable.

2. Can I pay rent to my parents?

Yes, you can pay rent to your parents and claim HRA. However, the rent must be physically transferred to their bank account, and they should declare this as "Rental Income" in their own Income Tax Return. You cannot pay rent to your spouse.

3. What if I pay rent for only part of the year?

HRA exemption is calculated on a monthly basis. If you paid rent for only 6 months, the exemption calculation (Rent - 10% Basic) will apply only for those 6 months. For the remaining months, the HRA received is fully taxable.

4. HRA vs. Section 80GG

If you do not receive HRA from your employer (e.g., self-employed or small firm), you can claim a deduction for rent paid under Section 80GG. The maximum limit under 80GG is ₹5,000 per month (₹60,000 per year).