How HRA exemption is calculated in India
House Rent Allowance is a common line on an Indian payslip. The whole of it is not automatically tax-free. If you opt for the old tax regime, the exempt amount is the lowest of three figures in section 10(13A) read with Rule 2A of the Income-tax Rules. This page runs that test in your browser the moment you enter the numbers.
The three legs of the test
- Actual HRA received for the period — the allowance your employer actually paid.
- Rent paid minus 10% of salary. If this comes out negative, treat it as zero.
- 50% of salary if the rented home is in Delhi, Mumbai, Kolkata or Chennai, otherwise 40% of salary.
“Salary” for this rule is narrower than CTC. It is basic pay, plus dearness allowance if that DA is part of retirement benefits, plus commission as a fixed percentage of turnover. Other allowances, a performance bonus and the employer’s provident-fund contribution stay out of this particular sum. That is why the form above asks for Basic and DA, not your full CTC.
A worked example (the default numbers on this page)
Suppose your monthly basic is ₹50,000, DA is nil, HRA received is ₹20,000 and you pay ₹18,000 rent in a non-metro city.
| Leg | Working | Amount |
|---|---|---|
| Actual HRA | as paid | ₹20,000 |
| Rent minus 10% of salary | 18,000 − 5,000 | ₹13,000 |
| 40% of salary | 40% × 50,000 | ₹20,000 |
The lowest figure is ₹13,000. That is the monthly exemption. The remaining ₹7,000 of HRA is taxable. If the same numbers ran for twelve months, the annual exemption would be ₹1,56,000. Change the city drop-down to one of the four metros and leg 3 becomes ₹25,000 — but the lowest figure is still ₹13,000, because rent minus 10% has not changed. Metro status only helps when that third leg was the one holding you down.
When the exemption becomes zero
If you pay no rent, or your rent is at most 10% of salary, the second leg is zero, so the exemption is zero. Living in a house you own, or staying with family without paying rent, does not create an HRA exemption, even if HRA appears on the payslip. In that case the whole HRA is taxable under the old regime (and the exemption does not exist under the new regime anyway).
Old regime only, and mid-year changes
The new tax regime is the default for most salaried people. HRA exemption is a benefit of the old regime. Run this calculator only if you are actually opting for the old regime, and compare the total tax under both regimes — a large HRA exemption can tip the comparison, but so can the loss of other deductions. If your rent, basic or HRA changed during the year, split the year into periods, run the three-way test on each period, and add the exempt amounts. Do not average unlike months into one box.
Proof your employer may ask for
The formula on this page is only the arithmetic. To actually claim the exemption through payroll or your return you will typically need rent receipts, a rental agreement, and, where annual rent exceeds ₹1 lakh, the landlord’s PAN. This tool never asks for a name, PAN or address — it cannot file anything for you. If you need printable receipts, use a separate rent-receipt workflow and keep those papers with your Form 16.
How to use this calculator
- Open your payslip and enter monthly basic, DA and HRA, or switch the period to annual and use the yearly totals.
- Enter the rent you actually paid for the same period (the amount on the receipt, not a round estimate).
- Choose whether the rented home is in Delhi, Mumbai, Kolkata or Chennai, or in any other city.
- Read the three legs and the highlighted exemption. The taxable HRA is what remains after that exemption.
All of this runs on this page. There is no login and no server. You can screenshot or write down the result for your own records.