Calculators

HRA Calculator

Calculate tax exemption on your House Rent Allowance and optimize your salary structure

What is House Rent Allowance (HRA)?

House Rent Allowance (HRA) is a salary component provided by employers to employees to cover their rental expenses. HRA offers significant tax benefits under Section 10(13A) of the Income Tax Act. The exemption amount is calculated based on your salary, actual rent paid, and the city where you reside.

HRA Exemption Calculation Rules

The HRA exemption is the minimum of the following three amounts:

  1. Actual HRA Received: The amount of HRA actually received from your employer
  2. Rent Paid Minus 10% of Basic Salary: Actual annual rent paid minus 10% of basic salary
  3. Percentage of Basic Salary: 50% of basic salary for metro cities, 40% for non-metro cities

Metro vs Non-Metro Cities

Metro Cities (50% of Basic)

  • Delhi
  • Mumbai
  • Kolkata
  • Chennai
  • All other cities are considered non-metro

Non-Metro Cities (40% of Basic)

  • All other cities in India
  • Includes tier-2 and tier-3 cities
  • Bangalore, Hyderabad, Pune, etc.
  • Lower exemption percentage applies

Eligibility for HRA Exemption

  • Rented Accommodation: Must be living in rented accommodation
  • Rent Payment: Must actually pay rent to the landlord
  • Rent Receipts: Should have rent receipts as proof of payment
  • PAN of Landlord: Required if annual rent exceeds ₹1,00,000
  • Not Living with Parents: Cannot claim HRA if living in own house or parents' house

Documents Required for HRA Claim

  • Rent Receipts: Signed receipts from landlord with revenue stamp if paid in cash
  • Rent Agreement: Copy of the rental agreement
  • PAN Card: Landlord's PAN if annual rent exceeds ₹1,00,000
  • Address Proof: Proof of residence at the rented accommodation
  • Form 16: Employer may ask for these documents while computing tax

Special Cases in HRA

Living with Parents

  • Can claim HRA if paying rent to parents
  • Need rent agreement and receipts
  • Parents must show rental income
  • PAN of parents required if rent > ₹1 lakh

Joint Ownership

  • Can claim proportionate HRA exemption
  • Based on share in the property
  • Need ownership documents
  • Each co-owner can claim separately

HRA Exemption Examples

Example 1: Metro City

  • Basic Salary: ₹50,000/month
  • HRA Received: ₹20,000/month
  • Rent Paid: ₹15,000/month
  • Exemption: Minimum of ₹20,000, ₹15,000, or ₹25,000 = ₹15,000

Example 2: Non-Metro City

  • Basic Salary: ₹40,000/month
  • HRA Received: ₹12,000/month
  • Rent Paid: ₹10,000/month
  • Exemption: Minimum of ₹12,000, ₹10,000, or ₹16,000 = ₹10,000

Tax Planning with HRA

  • Optimize Salary Structure: Negotiate higher HRA component in your salary
  • Choose Metro Location: If possible, prefer metro cities for higher exemption
  • Proper Documentation: Maintain complete rent receipts and agreements
  • Joint Family Setup: Pay rent to parents and claim HRA if living with them
  • Maximum Benefits: Structure salary to maximize HRA within reasonable limits

Common Mistakes to Avoid

  • Fake Rent Receipts: Using false rent receipts is illegal and can attract penalties
  • Missing PAN Details: Not providing landlord's PAN when rent exceeds ₹1 lakh annually
  • Improper Calculation: Wrong calculation of basic salary and DA for exemption
  • Missing Documentation: Not maintaining proper rent agreements and receipts
  • Double Benefits: Cannot claim both HRA and home loan benefits simultaneously

HRA and Home Loan

You can claim both HRA exemption and home loan benefits if you:

  • Own a house in one city but work in another city
  • Live in rented accommodation in the city of work
  • Have taken a home loan for the self-occupied property
  • Can claim HRA exemption and home loan interest deduction (Section 24B)
  • Cannot claim both if living in the same house for which home loan is taken
HRA Calculator