📌 HRA Exemption Formula (Section 10(13A))

HRA Exemption = Minimum of: (1) Actual HRA received, (2) Rent Paid − 10% of Basic+DA, (3) 50% of Basic+DA (metro) or 40% (non-metro). Updated for FY 2026-27 with 8 metro cities — Bengaluru, Pune, Hyderabad & Ahmedabad now qualify for the 50% rule.

HRA Calculator India — House Rent Allowance Exemption Calculator FY 2026-27

Calculate your HRA exemption under Section 10(13A) instantly. All 3 conditions shown with the lowest highlighted. Updated with all 8 metro cities for FY 2026-27. Includes ideal rent calculator and tax saving estimate.

✅ 100% Free⚡ Instant Results🔒 No Signup📱 Mobile Friendly🔐 No Data Stored🏙️ 8 Metro Cities Updated

How to Use This HRA Calculator — 4 Steps

1
💼
Enter Salary
Enter your monthly Basic Salary and DA (₹0 for most private employees). These two figures form the base for all three HRA conditions.
2
🏠
Enter HRA & Rent
Enter your monthly HRA component from your payslip and the actual rent paid to your landlord each month.
3
🏙️
Select City Type
Choose Metro (50%) for Delhi, Mumbai, Kolkata, Chennai, Bengaluru, Pune, Hyderabad, Ahmedabad — or Non-Metro (40%) for all others.
4
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Read All Results
All 3 conditions are calculated instantly. The lowest is your exemption. Also see ideal rent, tax saving, and monthly vs annual figures.

What is HRA Exemption Under Section 10(13A)?

House Rent Allowance (HRA) exemption under Section 10(13A) of the Income Tax Act, 1961 is one of the most significant tax benefits available to salaried employees in India. It allows you to reduce your taxable income by the amount of HRA that qualifies for exemption — potentially saving thousands of rupees in income tax every year.

The exemption is governed by Rule 2A of the Income Tax Rules, 1962, which defines exactly how the exempt amount is calculated. The rule requires you to compute three separate values and then take the minimum — this minimum is the maximum you can claim as tax-free HRA. Any HRA received above this amount is added back to your taxable salary.

Why the three-condition formula? The formula is designed to ensure that the exemption is proportional to three different factors: (a) what your employer actually pays you as HRA, (b) what you actually spend on rent above 10% of your salary, and (c) what is considered reasonable based on your salary and city type. The tax benefit is capped by whichever of these three is lowest — preventing abuse where, for example, someone could claim massive exemption by inflating rent receipts.

The 10% rule explained. Condition 2 subtracts 10% of Basic+DA from your rent paid. This 10% acts as a "self-contribution threshold" — the government's assumption that employees can afford to pay at least 10% of their salary toward housing from their own salary, and the HRA exemption should not apply to that portion. If you pay rent below 10% of your salary, Condition 2 becomes zero — and your HRA exemption is zero, even if you're paying rent.

Dearness Allowance (DA) and HRA. The formula uses Basic Salary + DA as the base, not just Basic Salary. DA matters significantly for government employees, whose salaries are heavily DA-weighted. For most private sector employees, DA is zero and only Basic Salary is used. Always check your payslip to confirm.

Important: HRA exemption is only under the old tax regime. If you opt for the new tax regime under Section 115BAC, Section 10(13A) HRA exemption is not available. This is a critical consideration when choosing your tax regime — employees paying substantial rent in metro cities often find the old regime more beneficial precisely because of HRA.

The HRA Exemption Formula — All 3 Conditions Explained

Under Rule 2A, HRA exemption equals the minimum of three conditions calculated on a monthly basis:

1

Actual HRA Received from Employer

HRA component in your salary slip

This is simply the HRA amount your employer pays you each month, as shown in your CTC breakdown or payslip. You cannot claim exemption for more than what you actually receive. If your employer pays ₹20,000 HRA but you pay ₹30,000 rent, your exemption cannot exceed ₹20,000 from this condition.

📐 Monthly HRA from employer = ₹20,000 → Condition 1 = ₹20,000
2

Rent Paid Minus 10% of (Basic + DA)

Rent Paid − 10% × (Basic + DA)

This condition ensures the exemption only applies to rent above 10% of your salary. If you earn ₹50,000 basic and pay ₹15,000 rent, Condition 2 = ₹15,000 − ₹5,000 = ₹10,000. If rent is below 10% of salary, this condition is ₹0 — meaning your entire HRA is taxable regardless of other conditions.

📐 Rent ₹15,000 − (₹50,000 × 10% = ₹5,000) = Condition 2 = ₹10,000
3

50% / 40% of (Basic + DA)

50% of Basic+DA for metro | 40% for non-metro

This condition caps the exemption based on city type. Metro cities get 50% because housing costs are higher. Non-metro cities get 40%. From FY 2026-27, 8 cities qualify for the 50% rate. This is often the binding constraint for employees with low rent relative to their salary.

📐 Metro employee, Basic ₹50,000: Condition 3 = ₹50,000 × 50% = ₹25,000
📌 Final HRA Exemption
HRA Exemption = MIN(Condition 1, Condition 2, Condition 3)
= MIN(₹20,000, ₹10,000, ₹25,000) = ₹10,000/month (exempt)
Taxable HRA = ₹20,000 − ₹10,000 = ₹10,000/month (taxable)

Metro vs Non-Metro Cities for HRA — Updated List for FY 2026-27

🚨 Major Update Effective April 1, 2026

The Finance Act 2026 expanded the list of metro cities for HRA purposes from 4 to 8 cities. Employees in Bengaluru, Pune, Hyderabad, and Ahmedabad now qualify for the 50% HRA rate (previously 40%). This means higher HRA exemption for lakhs of IT and corporate employees in these cities. Most online HRA calculators have NOT been updated. This calculator reflects the correct 8-metro rule from FY 2026-27.

🏙️ Metro Cities — 50% of Basic+DA

●
Delhi (NCR)
Includes Gurgaon, Noida, Faridabad, Ghaziabad
●
Mumbai
Includes Thane, Navi Mumbai, Kalyan-Dombivli
●
Kolkata
West Bengal capital — original 1961 metro
●
Chennai
Tamil Nadu capital — original 1961 metro
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Bengaluru ✨New 2026
Added April 1, 2026 — Karnataka capital, IT hub
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Pune ✨New 2026
Added April 1, 2026 — Maharashtra's 2nd largest city
●
Hyderabad ✨New 2026
Added April 1, 2026 — Telangana capital, IT corridor
●
Ahmedabad ✨New 2026
Added April 1, 2026 — Gujarat's largest city

🌆 Non-Metro Cities — 40% of Basic+DA

All Indian cities not listed as metro qualify for the 40% rate. This includes major cities such as:

○Jaipur
○Lucknow
○Chandigarh
○Surat
○Kochi
○Coimbatore
○Nagpur
○Visakhapatnam
○Bhopal
○Indore
○Patna
○Vadodara
○Agra
○Nashik
○Mysuru
○Thiruvananthapuram

+ All other cities and towns in India

Impact of the 50% vs 40% Rule — Example

ParameterBengaluru (old: 40%)Bengaluru (new: 50%)
Basic Salary₹80,000₹80,000
HRA Received₹32,000₹32,000
Rent Paid₹25,000₹25,000
Condition 1 (HRA)₹32,000₹32,000
Condition 2₹17,000₹17,000
Condition 3₹32,000 (40%)₹40,000 (50%)
Exemption (min)(Condition 2 is binding)₹17,000₹17,000

In cases where Condition 3 is binding (not Condition 2), the 50% metro rate directly increases the exemption by ₹8,000/month in this example — saving ₹28,800+/year in taxes at the 30% slab.

HRA Exemption Calculation — 2 Worked Examples

Example 1 — Bengaluru IT Employee (Metro)

Inputs
Basic Salary₹60,000/month
DA₹0 (private sector)
HRA Received₹24,000/month
Rent Paid₹18,000/month
CityBengaluru (Metro — 50%)
Step-by-Step Calculation
Salary (Basic+DA)₹60,000
Condition 1 — HRA received₹24,000
Condition 2 — ₹18,000 − (₹60,000 × 10%)₹18,000 − ₹6,000 = ₹12,000
Condition 3 — ₹60,000 × 50%₹30,000
HRA Exemption = MIN(₹24,000, ₹12,000, ₹30,000)₹12,000/month ✅
Taxable HRA = ₹24,000 − ₹12,000₹12,000/month
Annual Exemption = ₹12,000 × 12₹1,44,000
Annual Tax Saving (at 30%)≈ ₹43,200

Example 2 — Jaipur Employee (Non-Metro)

Inputs
Basic Salary₹35,000/month
DA₹0 (private sector)
HRA Received₹12,000/month
Rent Paid₹10,000/month
CityJaipur (Non-Metro — 40%)
Step-by-Step Calculation
Salary (Basic+DA)₹35,000
Condition 1 — HRA received₹12,000
Condition 2 — ₹10,000 − (₹35,000 × 10%)₹10,000 − ₹3,500 = ₹6,500
Condition 3 — ₹35,000 × 40%₹14,000
HRA Exemption = MIN(₹12,000, ₹6,500, ₹14,000)₹6,500/month ✅
Taxable HRA = ₹12,000 − ₹6,500₹5,500/month
Annual Exemption = ₹6,500 × 12₹78,000
Annual Tax Saving (at 20%)≈ ₹15,600

Can You Claim HRA Under the New Tax Regime?

❌ No — HRA Exemption is NOT Available Under the New Tax Regime

If you opt for the new tax regime under Section 115BAC, you cannot claim House Rent Allowance exemption under Section 10(13A). The entire HRA received from your employer becomes part of your taxable salary. This is one of the most significant trade-offs when choosing between old and new regime — particularly for employees paying substantial rent in metro cities.

The new tax regime was introduced to simplify taxation by offering lower slab rates in exchange for forgoing most exemptions and deductions. Under this regime, all salary allowances — including HRA, LTA, and other allowances — become fully taxable (except the ₹75,000 standard deduction).

When the old regime still wins despite higher rates: If your annual HRA exemption is large — say ₹2–3 lakh/year — the tax saving from that exemption alone can outweigh the benefit of lower slab rates in the new regime. Add Section 80C (₹1.5L), 80D (₹25K), and home loan interest (₹2L), and many higher-income employees find the old regime significantly more tax-efficient.

Use our salary calculator to compare your take-home under both regimes with your specific HRA exemption factored in.

Documents Required to Claim HRA Exemption

🧾

Rent Receipts (Monthly)

Rent receipts for each month you are claiming HRA. Must include: landlord name, property address, amount, date, month, and landlord signature. Stamps are recommended but not legally mandatory.

📝

Rent Agreement

A signed rental agreement between you and your landlord specifying the monthly rent amount, duration, address, and both parties' details. Registered agreements are stronger evidence but unregistered agreements are also accepted.

🪪

Landlord PAN Card

Mandatory if annual rent exceeds ₹1,00,000 (~₹8,334/month). The PAN is required so the landlord's rental income can be cross-verified in their ITR. Without it, your employer may disallow the HRA claim.

🏦

Bank Transfer Receipts

Screenshots or statements showing rent payment via bank transfer (NEFT/IMPS/UPI). Cash payments above ₹5,000/month are not recommended — they are difficult to verify and can be disallowed during assessment.

📋

Form 12BB

The self-declaration form submitted to your employer at the beginning of the financial year or when changing jobs. Lists all deductions and exemptions you plan to claim, including HRA details.

📂

Employer Form 16

Your employer issues Form 16 at year-end. Part B of Form 16 shows the HRA exemption amount calculated. Verify this matches your own calculation — discrepancies should be raised with payroll.

Special HRA Scenarios

🏠 Paying Rent to Parents

You can legally pay rent to your parents and claim HRA exemption. Requirements: (1) A written rent agreement signed by both parties, (2) Monthly rent paid via bank transfer, (3) Rent receipts from the parent, (4) Parent's PAN if annual rent > ₹1 lakh. Your parents must declare the rental income in their ITR — typically taxed at their (usually lower) rate. The net family tax savings can be significant, especially if parents have no or low income.

📅 Partial Year Claim (Job Change, Relocation)

HRA exemption can be claimed for the specific months you paid rent. If you paid rent for only 8 months of the year (e.g., you moved back with parents for 4 months), you calculate exemption only for those 8 months. Similarly, if you changed jobs mid-year, each employer calculates HRA separately for their period, and you combine both in your ITR. When changing employers, submit Form 12B to the new employer with your previous income details.

🏡 Claiming HRA + Home Loan Interest Together

This is possible if you own a property in City A but live on rent in City B for work. You can claim HRA exemption for rent in City B AND Section 24(b) home loan interest for the property in City A. However, if you own a house in the same city where you work, you generally cannot claim HRA exemption — authorities may question why you need rented accommodation when you own a house in the same city. The home loan property would be treated as self-occupied or let-out in this case.

🔄 Moving Between Metro and Non-Metro Mid-Year

If you relocated from a non-metro to a metro city (or vice versa) during the financial year, apply the correct city type for each period. For example: January to June in Jaipur (non-metro, 40%), July to March in Mumbai (metro, 50%). Calculate exemption separately for each period using the applicable percentage, then add them for the full-year total. Ensure your employer is updated about your city change so TDS is computed correctly.

HRA Calculator — Frequently Asked Questions

What is HRA (House Rent Allowance)?
House Rent Allowance (HRA) is a salary component paid by employers to help employees meet their rental accommodation expenses. It is a part of your Cost to Company (CTC) and appears as a line item in your salary slip. HRA forms a significant portion of the salary structure — typically 40% to 50% of basic salary. The key benefit is that a portion of HRA is exempt from income tax under Section 10(13A) of the Income Tax Act, 1961, provided you actually pay rent for your accommodation. If you do not pay rent or live in your own home, the entire HRA received is added to your taxable income.
How is HRA exemption calculated under Section 10(13A)?
HRA exemption under Section 10(13A) is the minimum of three conditions: (1) Actual HRA received from your employer, (2) Rent paid minus 10% of your Basic Salary + Dearness Allowance, and (3) 50% of Basic + DA if you live in a metro city, or 40% if non-metro. The lowest of these three values is your tax-exempt HRA. Any HRA received above this exempt amount is added to your taxable salary and taxed at your applicable slab rate. This three-condition rule is prescribed under Rule 2A of the Income Tax Rules, 1962.
What is the HRA exemption formula?
The HRA exemption formula (under Section 10(13A) and Rule 2A) is: HRA Exemption = Minimum of: (a) Actual HRA received from employer, (b) Rent Paid − 10% × (Basic Salary + DA), (c) 50% × (Basic + DA) for metro cities OR 40% × (Basic + DA) for non-metro cities. Step 1: Calculate all three values. Step 2: Pick the lowest. Step 3: That lowest value is your tax-exempt HRA. The remaining HRA (received minus exempt) is fully taxable. If Condition 2 is negative (rent is less than 10% of salary), it is treated as zero — meaning zero HRA exemption.
Which cities are metro cities for HRA in FY 2026-27?
From April 1, 2026, there are now 8 metro cities for HRA purposes (up from the original 4). The original metros where 50% of Basic+DA applies are: Delhi (NCR), Mumbai, Kolkata, and Chennai. The four new metros added from FY 2026-27 are: Bengaluru, Pune, Hyderabad, and Ahmedabad. Employees living in any of these 8 cities now qualify for the 50% metro rate. If you live in Bengaluru, Pune, Hyderabad, or Ahmedabad, you were previously calculated at 40% — from FY 2026-27 you now qualify for the higher 50% rate, resulting in a larger HRA exemption. All other cities remain non-metro at 40%.
Can I claim HRA exemption under the new tax regime?
No. HRA exemption under Section 10(13A) is NOT available if you opt for the new tax regime under Section 115BAC. Under the new regime, most allowances and exemptions are disallowed in exchange for lower tax slab rates. Since HRA exemption can be as large as ₹2–4 lakh annually for higher earners in metro cities, employees who pay significant rent may find the old tax regime more beneficial despite the higher headline rates. Use our HRA calculator to estimate your exemption amount and compare it against the tax slab benefits of the new regime before choosing.
Can I claim HRA if I pay rent to my parents?
Yes, you can pay rent to your parents and claim HRA exemption, but you must do it correctly. You need to: (1) Execute a rent agreement with your parent(s) stating the monthly rent amount, (2) Pay rent via bank transfer (not cash) to create a paper trail, (3) Obtain rent receipts from your parent(s), (4) If annual rent exceeds ₹1,00,000, provide your parent's PAN to your employer. Your parent must declare the rental income they receive from you in their own income tax return. This is a legitimate and commonly used tax planning strategy, but it must involve genuine payments and documentation.
Can I claim both HRA exemption and home loan benefits simultaneously?
Yes, you can claim both HRA exemption and home loan benefits simultaneously, but only in specific circumstances. If your house is in a different city from where you work, you can claim HRA exemption (for the rented accommodation where you live) and home loan interest deduction under Section 24(b) (for the property you own). However, if you own a house in the same city where you work but still live in rented accommodation, the Income Tax Department may scrutinize your claim. Tax authorities may consider your own house as "self-occupied" and deny the HRA exemption on the grounds that you do not genuinely need rented accommodation. Consult a CA for advice on your specific situation.
What documents are required to claim HRA exemption?
To claim HRA exemption from your employer (for TDS purposes), you typically need: (1) Rent receipts for each month — include the landlord's name, address, amount, date, and signature, (2) A signed rent agreement with your landlord, (3) Landlord's PAN card if annual rent exceeds ₹1,00,000 (mandatory requirement), (4) Bank statements showing rent payment transfers (cash payments are not advisable above ₹5,000/month). For self-employed individuals or those filing ITR directly, the same documents are needed but submitted during assessment if scrutinized. Employers often ask for rent proof in January–February for TDS computation for the full year.
Is landlord PAN mandatory for HRA claims?
Landlord PAN is mandatory only if your annual rent payment exceeds ₹1,00,000 (i.e., more than approximately ₹8,334 per month). This requirement was introduced to ensure landlords declare rental income in their tax returns. If annual rent is below ₹1,00,000, PAN is not required but other documentation (rent receipts, agreement) is still necessary. If your landlord does not have a PAN or refuses to share it, the Income Tax Rule 26C requires the employee to obtain a declaration from the landlord to this effect, though employers may still disallow the HRA claim without PAN if annual rent exceeds the threshold.
What is the ideal rent to maximize HRA exemption?
The ideal rent to maximize HRA exemption is the amount that makes Condition 2 equal to or greater than both Condition 1 and Condition 3. Condition 2 is: Rent Paid − 10% of (Basic + DA). To maximize exemption, ensure Condition 2 is not the binding constraint. The ideal minimum monthly rent is: [Minimum of (HRA Received, 50%/40% of Basic+DA)] + 10% of (Basic+DA). Our HRA calculator automatically shows you this ideal rent amount in Section D of the results. Paying below this ideal rent means you are leaving HRA exemption unused. Paying above the ideal rent doesn't increase your exemption but increases your actual outflow.
What happens if I change jobs mid-year — how is HRA calculated?
If you change jobs during the financial year, HRA exemption is calculated separately for each employment period. For each employer, you calculate: actual HRA received during that period, rent paid during that period minus 10% of salary for that period, and metro/non-metro percentage for that period. The exemption for each employment is calculated independently and then added together for the full year's total exemption. When filing your ITR, you must account for HRA from both employers. Your new employer will typically ask for Form 12B (previous employment income details) so they can compute TDS correctly for the rest of the year.
What is Section 80GG and how is it different from HRA?
Section 80GG is an income tax deduction available to individuals who do NOT receive HRA as part of their salary but pay rent for their accommodation. This includes self-employed professionals, freelancers, and salaried employees whose employer does not provide HRA. Under 80GG, the deduction is the minimum of: (a) Rent paid minus 10% of total income, (b) ₹5,000 per month (₹60,000 annually), and (c) 25% of total adjusted income. The key differences from HRA: Section 80GG has a lower cap (₹5,000/month vs unlimited HRA exemption), does not depend on city type, is available to self-employed individuals, but requires that neither you nor your spouse or minor child owns residential property in the city where you live and work.

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ToolStackHub — 100% Browser-Based, No Data Stored

This HRA calculator runs entirely in your browser. Your salary and rent figures are never sent to any server, never stored, and disappear when you close the tab. Calculator logic verified against Section 10(13A) and Rule 2A for FY 2026-27 including the updated 8-metro-city list.

✅ No server — browser only📅 Updated FY 2026-27🏙️ All 8 metro cities included
Disclaimer: This HRA calculator is for informational and educational purposes only. Calculations are based on Section 10(13A) and Rule 2A as of FY 2026-27. The 8-metro-city update is based on Finance Act 2026 provisions effective April 1, 2026. Always verify with your employer's payroll team or a Chartered Accountant for exact HRA exemption amounts. Tax laws may be amended — check the Income Tax Department website for the latest rules.