HRA Calculator — How Much of Your HRA Is Tax-Free?

What is HRA Exemption?

House Rent Allowance (HRA, मकान किराया भत्ता) is the part of your salary meant to cover rent. If you live in a rented home and choose the old tax regime, a part of this allowance can be tax-free. The exempt amount is not simply your rent or your HRA — the Income Tax law sets three limits and only the lowest one is exempt. Many salaried people over-estimate or under-claim because they don't know which limit applies to them.

This free HRA calculator works out all three limits, shows which one is binding, and tells you the exempt and taxable HRA for the year. It also includes the expanded list of 50% cities that applies from FY 2026-27, so employees in Bengaluru, Hyderabad, Pune and Ahmedabad can see the difference the change makes.

Key Features

• Exact formula with all three limits shown side by side.
• City and year selection — 8 cities at 50% for FY 2026-27, 4 metros for FY 2025-26.
• Yearly and monthly exemption.
• Binding limit explained — know why only part of your HRA is exempt.
• Taxable HRA for your tax planning.
• Private — nothing leaves your browser.

How to Use the HRA Calculator

1. Enter your monthly basic salary.
2. Enter any DA that counts for retirement benefits (often zero in private jobs).
3. Enter the HRA you receive each month (from your payslip).
4. Enter the rent you pay each month.
5. Choose your city and the financial year.
6. Read the yearly exemption, the three limits and the taxable HRA.

The HRA Exemption Formula

Exempt HRA is the least of these three amounts for the year:

1. Actual HRA received from your employer.
2. Rent paid minus 10% of salary.
3. 50% of salary if you live in a listed city, or 40% elsewhere.

Here, salary = basic salary + dearness allowance (only if it forms part of retirement benefits) + commission based on a fixed percentage of turnover. HRA, bonus, special allowance and other components are not included.

Worked example: basic ₹40,000 a month (₹4,80,000 a year), HRA ₹20,000 (₹2,40,000 a year), rent ₹25,000 (₹3,00,000 a year).

The same salary and rent give ₹48,000 more tax-free income in a 50% city — at a 30% slab that is about ₹15,000 of tax saved in a year.

Which Cities Get 50%?

For decades only four cities qualified for the 50% limit: Delhi, Mumbai, Kolkata and Chennai. With the new Income-tax Act, 2025 taking effect on 1 April 2026, the Income-tax Rules, 2026 are reported to add Bengaluru, Hyderabad, Pune and Ahmedabad, giving eight cities at 50% from FY 2026-27. Some commentary described the change as a draft before final notification, so confirm with the official CBDT rules and your employer's payroll team. Use the year selector to compare.

Old vs New Tax Regime and HRA

HRA exemption exists only in the old tax regime. The new regime — now the default — has lower slab rates and a ₹75,000 standard deduction but no HRA exemption, no 80C and most other deductions removed. Whether HRA makes the old regime worthwhile depends on your total deductions:

• High rent in a big city + 80C investments + home loan interest → the old regime may save more.
• Low or no rent and few investments → the new regime is usually better.

Run both scenarios in our Income Tax Calculator before telling your employer which regime to use.

HRA Exemption at Different Salaries (yearly)

Notice that in most rows the city doesn't matter, because “rent minus 10% of salary” is already the lowest limit. The 50% city rule helps most when rent is high compared with your basic salary. Paying a little more rent (for example moving to a better flat) increases the exemption only until another limit becomes the lowest.

No HRA? Section 80GG for the Self-Employed

If you are self-employed, a freelancer, or an employee whose salary has no HRA component, you can still get relief for rent under Section 80GG in the old regime. The deduction is the least of: ₹5,000 a month (₹60,000 a year), 25% of your total income (after other deductions), and rent paid minus 10% of total income. You, your spouse or minor child must not own a house in the city where you live, and you file Form 10BA with your return. The limits are much lower than HRA, which is one reason salary structures with an HRA component are more tax-efficient for tenants.

How Much Tax Does HRA Save?

The tax saved is roughly the exempt HRA multiplied by your slab rate plus 4% cess. An exemption of ₹2,40,000 saves about ₹74,880 at the 30% slab (₹2,40,000 × 31.2%), about ₹49,920 at 20% and about ₹12,480 at 5% under the old regime's slabs. These savings must be weighed against the lower rates of the new regime, which is why the regime comparison matters more than the HRA number alone.

Documents You Need

• Rent receipts — monthly or quarterly, signed by the landlord, with amount, period and address.
• Rent agreement — many employers ask for it, especially for higher rents.
• Landlord's PAN — mandatory if your rent is above ₹1 lakh a year (about ₹8,333 a month).
• Bank transfer records — paying rent by bank transfer or UPI gives clear proof if questioned.

If you forgot to submit proofs to your employer, you can still claim the exemption while filing your income tax return in the old regime, keeping the documents ready in case of a query.

Special Situations

• Rent to parents: allowed if genuine — pay by bank transfer, sign an agreement, and your parent declares the rent as income.
• Rent to spouse: generally not accepted by tax authorities.
• Own house in another city: you can claim HRA where you rent and also claim home loan benefits on your own house, if both are genuine.
• Changed city mid-year: calculate each period separately with the correct city limit and add them up.
• No HRA in salary: consider Section 80GG in the old regime if you pay rent and receive no HRA.

Common Mistakes to Avoid

• Using gross salary instead of basic + DA for the 10% and 50%/40% limits.
• Assuming all rent is exempt — only the least of the three limits is.
• Fake rent receipts — tax departments now match rent claims with landlords' PAN data; false claims attract penalties.
• Forgetting regime choice — in the new regime HRA is fully taxable.
• Ignoring months without rent — if you moved in mid-year, count only the months you actually paid rent.

Quick Glossary

• HRA: House Rent Allowance.
• Section 10(13A): the old-Act section that exempted HRA (carried into the new Act).
• Section 80GG: rent deduction for those without HRA.
• Old regime: tax system with exemptions and deductions.
• Metro city: a city that qualifies for the 50% limit.

Why Use This HRA Calculator?

It applies the exact three-limit rule, includes the latest city list, explains which limit applies to you and shows the tax-free and taxable amounts in seconds — free and private.

Use it before you submit investment proofs to your employer in January–February, and again whenever your rent or salary changes, so your TDS stays accurate and you avoid a surprise tax bill when you file your return.

HRA Calculator — Key Facts

Frequently Asked Questions

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