HRA Exemption Calculator

Updated August 2026 · Free · No sign-up

Calculate your HRA exemption under Section 10(13A) — the least-of-three formula, metro vs non-metro rates, and how much of your house rent allowance escapes tax (old regime).

The Least-of-Three Formula

1. Actual HRA received from your employer.
2. Rent paid − 10% of basic+DA — the "excess rent" test.
3. 50% of basic+DA in the four metros (Delhi, Mumbai, Kolkata, Chennai); 40% elsewhere — yes, Bengaluru, Hyderabad, Pune, and Gurgaon count as non-metro for this rule, a permanent source of grievance.

The lowest of the three is exempt; the rest of your HRA is taxable. Old regime only — choosing the new regime forfeits HRA exemption entirely, which is precisely the trade to model in the in-hand salary calculator.

Worked Examples

Example 1 — metro renter. Basic ₹40,000, HRA ₹20,000, rent ₹18,000, Mumbai: (1) ₹20,000; (2) 18,000 − 4,000 = ₹14,000; (3) ₹20,000 → exemption ₹14,000/month (₹1.68L/yr); taxable HRA ₹6,000/month.

Example 2 — the rent-too-low case. Same salary, rent ₹4,000: test (2) = 4,000 − 4,000 = ₹0 → no exemption. Rent below 10% of basic wastes the entire HRA benefit.

Example 3 — Bengaluru at 40%. Basic ₹60,000, HRA ₹30,000, rent ₹30,000: (1) 30,000; (2) 30,000 − 6,000 = 24,000; (3) 40% × 60,000 = 24,000 → exemption ₹24,000 — the non-metro cap binds.

Documentation Rules

Optimizing HRA (Legitimately)

• Structure check: exemption can never exceed HRA received — if your rent is high but HRA is only 20% of basic, ask for restructuring toward the 40-50% convention (see basic salary calculator for the component logic).
• The 10% floor: exemption only grows with rent above 10% of basic — marginal rupees of rent below that line get zero tax benefit.
• Spouse rent doesn't work; parent rent does — courts have rejected spousal arrangements and accepted genuine parental ones.
• No HRA component at all? Section 80GG offers a smaller deduction (least of ₹5,000/month, 25% of income, rent − 10% of income) for the self-employed and HRA-less.
• Home loan + HRA together is legitimate when you rent in your work city and own elsewhere — both benefits run in parallel.

New Regime Reality Check

The new regime's lower slabs often beat old-regime-with-HRA for modest rents, but heavy metro renters (rent ≥ 25-30% of gross) frequently still win under the old regime once HRA + 80C stack up. Run both: this exemption × 12 × your marginal rate is the old regime's HRA-side argument. Slabs and rules change with budgets — verify current-year figures before deciding.

✓ Formula verified  •  Last updated: August 20, 2026