How HRA Calculator Works
House Rent Allowance (HRA) is a salary component to help employees pay rent. Under Section 10(13A) of Income Tax Act, you can claim HRA exemption to reduce your taxable income. Tax-exempt HRA is the minimum of three values - this calculator computes all three and picks the lowest.
HRA Exemption = Minimum of:
1. Actual HRA received from employer
2. 50% of Basic+DA (Metro) OR 40% of Basic+DA (Non-metro)
3. Actual rent paid - 10% of Basic+DA
Metro Cities for HRA
Only these 4 cities are classified as "metros" for HRA purpose:
- Mumbai (including suburbs)
- Delhi (including NCR - Gurugram, Noida, Faridabad NOT counted as metro for HRA)
- Chennai
- Kolkata
Note: Bengaluru, Hyderabad, Pune, Ahmedabad - despite being major cities - are classified as non-metro for HRA (40% rule).
Example Calculation
Scenario: Basic ₹6L, HRA ₹2.4L, Rent ₹3.6L, working in Mumbai (metro)
1. Actual HRA received = ₹2,40,000
2. 50% of Basic = ₹3,00,000
3. Rent - 10% of Basic = ₹3,60,000 - ₹60,000 = ₹3,00,000
HRA Exemption = ₹2,40,000 (minimum of three)
Taxable HRA = ₹2,40,000 - ₹2,40,000 = ₹0
Tax saved (30% slab) = ₹72,000 + cess
HRA Exemption Conditions
- You must be a salaried employee receiving HRA in salary
- You must actually pay rent for accommodation
- Cannot claim if living in own house (even partially)
- Need rent receipts/agreement as proof
- If annual rent > ₹1,00,000, must provide landlord's PAN to employer
- Cannot pay rent to spouse and claim HRA (Income Tax department disallows)
- Available ONLY in Old Tax Regime (NOT in New Regime)
HRA + Home Loan - Can I Claim Both?
YES, you can claim both HRA exemption AND home loan deduction simultaneously if:
- Your owned property is in different city than where you work
- Your owned property is in same city but is rented out (not self-occupied)
- Genuine reasons exist for living on rent despite owning property (e.g., job location away from owned home)
Documents Needed for HRA Exemption
- Rent Receipts: Monthly receipts with revenue stamp (above ₹5,000/month)
- Rent Agreement: Notarized rental agreement (for amounts above ₹1L/year)
- Landlord's PAN: If annual rent exceeds ₹1L, mandatory to provide
- Bank Statement: Showing rent payment to landlord (recommended)
Frequently Asked Questions
Q: Is Bengaluru/Pune/Hyderabad metro for HRA?
No! Only Mumbai, Delhi, Chennai, Kolkata are metros for HRA purpose. Bengaluru, Pune, Hyderabad, Ahmedabad get 40% rule (non-metro). This is per Income Tax Act, even though these are popularly called metros.
Q: Can I claim HRA in new tax regime?
No. HRA exemption is available ONLY in old tax regime. New regime doesn't allow HRA, but offers higher standard deduction (₹75,000) and lower slabs.
Q: I pay rent to my parents, can I claim HRA?
Yes, but follow proper documentation: actual rent payment via bank, rent agreement, parents must declare it as income in their ITR. Cannot pay rent to spouse though.
Q: HRA not in CTC, can I still claim exemption?
No. HRA exemption can only be claimed if HRA is part of your salary structure. Talk to HR to restructure salary if not included.
Q: I work from home, can I claim HRA?
Yes if you genuinely pay rent for the accommodation you live in (even if you work from there). HRA is for residence, not office.