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

House Rent Allowance is tax-exempt only under the old regime — and only the least of three amounts: the HRA you actually receive, your rent minus 10% of basic salary, and 50% of basic (metro) or 40% (non-metro). A large HRA exemption is one of the few things that can still make the old regime beat the new one, so calculate this before choosing your regime.

🏠 Calculate HRA Exemption

Basic salary + DA (₹/month)

HRA received (₹/month)

Rent paid (₹/month)

City

Tax-free HRA

per year

Taxable HRA

per year

Tax-free monthly

Exemption = least of the three tests, per §10(13A). Only available in the old tax regime. Rent above ₹1 lakh/year requires the landlord's PAN for your employer's records.

⚠️ Disclaimer: CalcSmart is not a tax, financial, legal or medical advisor. Calculators and content here are for general information only, compiled from publicly available rules and rates that change frequently. Always verify the accuracy and freshness of figures with official sources (e.g. incometax.gov.in, cbic.gov.in, your bank) or a qualified professional before acting on any result.

The Three-Test Rule (§10(13A))

Your tax-free HRA is the lowest of:

HRA actually received from your employer
Rent paid minus 10% of basic salary (+DA)
50% of basic salary in a metro (Delhi, Mumbai, Kolkata, Chennai) or 40% elsewhere

Example: basic ₹50,000/month, HRA ₹20,000/month, rent ₹18,000/month in Bengaluru (non-metro for HRA purposes, despite its rents). Test 1 = ₹2.4L; Test 2 = (18,000 − 5,000) × 12 = ₹1.56L; Test 3 = 40% × ₹6L = ₹2.4L. Exemption = ₹1.56 lakh; the remaining ₹84,000 of HRA is taxed as salary.

⚠️ Bengaluru, Hyderabad, Pune, Gurugram and Noida are NOT metros for HRA — the metro list is fixed at Delhi, Mumbai, Kolkata and Chennai. Tech-city renters get only the 40% cap, a long-standing complaint.

HRA exemption in the new tax regime

This is the single biggest point of confusion: HRA exemption is not available in the new tax regime. Under §10(13A) the exemption exists only in the old regime. If you have opted for the new regime — now the default — your entire House Rent Allowance is taxed as ordinary salary, no matter how much rent you pay. A large HRA exemption is the main reason some metro renters still choose the old regime; compare the two side by side in our income tax calculator before deciding.

HRA exemption for Pune, Hyderabad and Bengaluru

Because these cities are non-metro for HRA, the third test caps your exemption at 40% of basic (not 50%). Worked example for Pune or Hyderabad: basic ₹60,000/month, HRA ₹24,000/month, rent ₹22,000/month. Test 1 = ₹2.88L; Test 2 = (22,000 − 6,000) × 12 = ₹1.92L; Test 3 = 40% × ₹7.2L = ₹2.88L. Exemption = ₹1.92 lakh — the rent-minus-10% test is what binds for most tech-city renters, not the metro percentage.

HRA when your landlord won't give a PAN

If your annual rent exceeds ₹1 lakh, your employer needs your landlord's PAN to allow the exemption in your TDS. If the landlord refuses, you can submit a signed declaration from the landlord (Form 60) with their name and address — but employers increasingly reject HRA claims without a PAN, and you may have to claim the exemption directly in your return instead. For rent above ₹50,000/month you must also deduct 2% TDS on the rent itself.

HRA Rules Worth Knowing

New regime = no HRA exemption. If you claim under the new regime, HRA is fully taxable. A big exemption here is the main reason some renters still pick the old regime — compare both in our income tax calculator.
Rent to parents is allowed if genuine: pay by bank transfer, have a rent agreement, and your parent declares the rent as income.
Landlord PAN needed above ₹1 lakh/year of rent for employer TDS purposes; above ₹50,000/month, you must deduct 2% TDS (was 5% before Oct 2024) on the rent itself.
No HRA component in salary? You can claim §80GG instead — least of ₹5,000/month, 25% of total income, or rent minus 10% of income (old regime only).

Frequently Asked Questions

It's the least of three amounts: (1) actual HRA received, (2) rent paid minus 10% of basic salary + DA, and (3) 50% of basic in Delhi, Mumbai, Kolkata or Chennai (40% in all other cities). The remainder of your HRA is taxable as salary. The exemption is only available under the old tax regime.

No. HRA exemption under §10(13A) is not available in the new regime — the full HRA is taxed as salary. If your HRA exemption is large (typically with high rent in a metro), compare regimes before defaulting to the new one.

No. For HRA purposes only Delhi, Mumbai, Kolkata and Chennai count as metros (50% of basic). Bengaluru, Hyderabad, Pune, Gurugram and Noida are non-metro — capped at 40% of basic, despite comparable rents.

Yes, if the arrangement is genuine: transfer rent by bank, keep a rent agreement and rent receipts, and your parent must declare the rent as taxable income. You cannot claim HRA for rent paid to your spouse.

Yes, in the old regime — e.g., you own a house in one city (claiming §24(b) interest) but rent in another city for work. Both claims must be genuine; same-city claims invite scrutiny but are valid if justified (e.g., the owned house is far from your workplace).