HRA Calculator India 2026 - Calculate House Rent Allowance Tax Exemption
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Understanding House Rent Allowance (HRA) in India
What is HRA?
House Rent Allowance (HRA) is a component of salary paid by employers to employees to meet their accommodation expenses when living in rented housing. Under Section 10(13A) of the Income Tax Act, a portion of HRA is exempt from income tax, which helps reduce your overall tax liability.
Who Can Claim HRA Exemption?
You can claim HRA exemption if you meet the following conditions:
- You are a salaried employee receiving HRA as part of your salary
- You are living in rented accommodation
- You are actually paying rent for the accommodation
- You have chosen the old tax regime (HRA exemption is not available under new regime)
Note: Self-employed individuals and those opting for the new tax regime cannot claim HRA exemption, but they may claim deduction under Section 80GG if eligible.
HRA Exemption Calculation Formula
The HRA exemption is calculated as the minimum of the following three amounts:
-
Actual HRA received from employer
The HRA component in your salary slip -
Rent paid minus 10% of basic salary
Formula: (Annual Rent Paid) - (10% × Annual Basic Salary) -
50% of basic salary (metro) or 40% (non-metro)
Metro cities: Delhi, Mumbai, Kolkata, Chennai
Non-metro: All other cities and towns
Important Points About Basic Salary
For HRA calculation, "basic salary" includes:
- Basic Salary: The fixed component of your salary
- Dearness Allowance (DA): Only if it forms part of retirement benefits
Other allowances like special allowance, transport allowance, etc., are not included in the basic salary for HRA calculation.
Example Calculation
Scenario: Employee in Mumbai (Metro city)
- Basic Salary: ₹50,000/month (₹6,00,000/year)
- HRA Received: ₹25,000/month (₹3,00,000/year)
- Actual Rent Paid: ₹20,000/month (₹2,40,000/year)
Calculation:
- Actual HRA received = ₹3,00,000
- Rent paid - 10% of basic = ₹2,40,000 - ₹60,000 = ₹1,80,000
- 50% of basic salary (metro) = ₹3,00,000
HRA Exemption = Minimum of above three = ₹1,80,000
Taxable HRA = ₹3,00,000 - ₹1,80,000 = ₹1,20,000
Documents Required to Claim HRA Exemption
For Annual Rent up to ₹1 Lakh
- Rent Receipts: Monthly or periodic rent receipts from your landlord
- Declaration: Declaration to your employer at the beginning of the financial year
- Proof of Payment: Bank statements showing rent payments (recommended)
For Annual Rent Exceeding ₹1 Lakh
- Landlord's PAN Card: Mandatory for annual rent above ₹1 lakh
- Rent Agreement: Registered or notarized rental agreement
- Rent Receipts: On stamp paper with revenue stamps
- Proof of Payment: Bank transfer statements, cancelled cheques, or payment receipts
- Landlord's Details: Name, address, and PAN details
Rent Receipt Format
A valid rent receipt should contain:
- Landlord's name and address
- Tenant's (your) name
- Property address
- Rent amount and period
- Date of payment
- Landlord's signature
- Revenue stamp (for amounts above certain limits)
- Landlord's PAN (if annual rent exceeds ₹1 lakh)
Special Cases and Important Rules
Paying Rent to Parents
Yes, you can pay rent to your parents and claim HRA exemption, but:
- You need a proper rent agreement with your parents
- Rent should be paid through bank transfer (recommended for proof)
- Your parents must declare this rent as "Income from House Property" in their tax returns
- Your parents can claim standard deduction and other expenses against this income
- You cannot pay rent if the property is owned by your spouse
Paying Rent to Spouse
You cannot claim HRA exemption if you pay rent to your spouse, as per income tax clubbing provisions.
Living in Own House
You cannot claim HRA exemption if you live in a property owned by you. However, you may be eligible for home loan interest deduction under Section 24(b) if you have a home loan.
Living in Multiple Cities
If you live in rented accommodation in multiple cities during the year (e.g., job transfer), you can claim HRA exemption for all periods, calculated separately for metro and non-metro periods.
Section 80GG for Non-HRA Recipients
If you don't receive HRA but pay rent, you may claim deduction under Section 80GG:
- Maximum deduction: ₹5,000 per month (₹60,000 per year)
- Calculated as minimum of: (a) ₹5,000/month, (b) 25% of total income, (c) Rent paid - 10% of total income
- Available only in old tax regime
- Cannot be claimed if you or family owns residential property in the city where you work
HRA Exemption: Old vs New Tax Regime
⚠️ Important: HRA Not Available in New Regime
HRA exemption is not available under the new tax regime. If you want to claim HRA exemption, you must opt for the old/existing tax regime. Compare both regimes to see which gives you better tax savings based on your total deductions and exemptions.
When to Choose Old Regime for HRA?
Consider staying with the old regime if:
- Your HRA exemption is substantial (typically above ₹2-3 lakhs annually)
- You have significant deductions under 80C, 80D, home loan interest, etc.
- Combined deductions exceed the tax benefit from lower rates in new regime
Tip: Use our Income Tax Calculator to compare both regimes with your actual figures.
Need Help with Tax Planning?
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Calculate Income TaxFrequently Asked Questions (FAQ)
How is HRA exemption calculated in India?
HRA exemption is calculated as the minimum of three amounts: (1) Actual HRA received from employer, (2) Rent paid minus 10% of basic salary, (3) 50% of basic salary for metro cities (Delhi, Mumbai, Kolkata, Chennai) or 40% for non-metro cities. The least of these three is your HRA tax exemption.
Which cities are considered metro for HRA calculation?
For HRA exemption purposes, only four cities are considered metro: Delhi, Mumbai, Kolkata, and Chennai. All other cities and towns in India are treated as non-metro for HRA calculation, which allows 40% of basic salary as the maximum exemption instead of 50%.
Can I claim HRA if I live with my parents?
Yes, you can claim HRA exemption even if you live with your parents, provided you pay rent to them. You need a rent agreement and proof of payment (bank transfers are recommended). Your parents must declare this rent as income in their tax returns. However, you cannot claim HRA if you live in a property owned by you or your spouse.
What documents are needed to claim HRA exemption?
To claim HRA exemption, you need: (1) Rent receipts from your landlord, (2) Rental agreement (if annual rent exceeds ₹1 lakh, landlord's PAN is mandatory), (3) Proof of rent payment (bank statements or cancelled cheques), (4) Landlord's PAN card details for annual rent above ₹1 lakh. Submit these to your employer for monthly TDS benefit or while filing ITR.
Is HRA available under the new tax regime?
No, HRA exemption is not available under the new tax regime introduced from FY 2020-21. If you opt for the new tax regime, you cannot claim HRA exemption or most other deductions. HRA exemption is only available if you choose the old tax regime. Compare both regimes to see which is more beneficial for your situation.
Can I claim both HRA and home loan interest deduction?
Yes, you can claim both HRA exemption and home loan interest deduction (Section 24) simultaneously, provided the rented house is in a different city from where your owned house is located. If both properties are in the same city, tax authorities may scrutinize the claim, so ensure you have valid reasons (like property being far from workplace, under construction, or rented out to someone else).
What if my employer doesn't provide HRA?
If you don't receive HRA from your employer but pay rent, you can claim deduction under Section 80GG (available only in old tax regime). The maximum deduction is ₹5,000 per month or 25% of your total income or rent paid minus 10% of income, whichever is least. You cannot claim 80GG if you or your family owns a residential property in the city where you work.