HRA Exemption Calculator 2026
Calculate your House Rent Allowance tax exemption and direct income tax savings under Section 10(13A) using official Metro (50%) and Non-Metro (40%) guidelines.
Include Dearness Allowance (DA) if it forms part of retirement benefits
Found under the allowances head on your monthly payslip
Used to compute your exact net cash tax savings in rupees
Section 10(13A) 3-Condition Matrix
The lowest value among the three rules below is completely tax-exempt
The Ultimate Guide to HRA Exemption: Section 10(13A) & Rule 2A
Form 12BB requirements, parent rent agreements, and New vs Old Regime rules
House Rent Allowance (HRA) is one of the most substantial salary components provided by employers in India to assist employees in covering residential rental costs. Under Section 10(13A) of the Income Tax Act, 1961, read with Rule 2A of the Income Tax Rules, salaried individuals can claim a substantial portion of this allowance as tax-free deduction, significantly reducing their net taxable income.
The Official 3-Tier HRA Exemption Formula
The Income Tax Department evaluates three specific figures and exempts the least (lowest) amount among them:
- Actual HRA Received: The total House Rent Allowance credited by your employer during the financial year.
- Rent Paid Minus 10% of Salary: The total rent actually paid by the tenant minus 10% of their "Salary" (defined strictly as Basic Salary plus Dearness Allowance, if DA enters into retirement benefit computations).
- 50% or 40% of Salary:
• 50% of Basic Salary: Applicable if your rented house is located in the four recognized metro cities: Mumbai, Delhi, Kolkata, or Chennai.
• 40% of Basic Salary: Applicable for all other cities in India, including technology hubs like Bengaluru, Hyderabad, Pune, Gurugram, Noida, and Ahmedabad.
Critical Tax Notice: Old vs New Tax Regime
⚠️ Important Clarification:
Under the New Tax Regime (Section 115BAC), the House Rent Allowance exemption under Section 10(13A) is completely disallowed. To claim HRA tax exemption, an employee must consciously opt for the Old Tax Regime during payroll declaration or while filing their ITR. If your annual rent is high, the Old Tax Regime combined with Section 80C, 80D, and HRA often results in higher in-hand cash savings.
Can You Pay Rent to Parents and Claim HRA?
Yes! Paying rent to parents is a legitimate and widely utilized tax planning strategy under Indian income tax jurisprudence, provided you satisfy the following strict audit rules:
- Property Ownership: The residential house must be legally registered in your parents' name (not in your name or your spouse's name). You cannot pay rent to your spouse.
- Formal Rent Agreement: Execute a written rental agreement specifying monthly rent, address, and tenant-landlord terms.
- Bank Transfer Trail: Pay rent through electronic banking channels (UPI, IMPS, NEFT) or cheques every month. Avoid unaccounted cash payments.
- Parents' Tax Return: Your parents must declare the rental income received from you under the head "Income from House Property" in their Income Tax Return. Since parents are entitled to a standard 30% statutory deduction on rental income (under Section 24a), the family unit saves significant tax.
Can You Claim Both HRA and Home Loan Tax Benefits?
Many taxpayers mistakenly believe they must choose between HRA and home loan tax deductions. Under law, you can claim both HRA and Home Loan benefits (Section 24b for home loan interest up to ₹2 Lakh and Section 80C for principal repayment) if:
- Your owned residential property is located in a different city due to your employment or business.
- Your owned house is located in the same city, but too far from your workplace to commute daily, forcing you to rent closer to the office (while leasing out your owned house or keeping it ready for occupation).
- Your owned property is currently under construction and not yet ready for possession.
Frequently Asked Questions (FAQs)
When is Landlord PAN submission mandatory? ▾
As per CBDT circulars, if the total annual rent paid exceeds ₹1,00,000 (which equates to ₹8,333 per month), it is mandatory to provide the landlord's PAN on Form 12BB to your employer. If the landlord does not have a PAN, a signed Form 60 declaration must be obtained.
Why are Bengaluru and Hyderabad classified as Non-Metro for HRA? ▾
Under Income Tax Rule 2A, only four historical presidency cities (Mumbai, Kolkata, Delhi, and Chennai) were designated as Metros entitled to the 50% slab. Despite rapid urbanization, IT hubs like Bengaluru, Hyderabad, and Pune remain under the 40% non-metro slab until an amendment is enacted by Parliament.
What if my employer does not provide HRA in my CTC? ▾
If you pay rent but do not receive HRA (e.g. self-employed professionals or employees without HRA in salary structure), you can claim rent deduction under Section 80GG, capped at the least of ₹5,000 per month, 25% of total income, or rent paid minus 10% of total income.
Can I claim HRA if I missed submitting rent receipts to my employer? ▾
Yes! Even if your employer deducted higher TDS because you missed the company's internal submission deadline, you can still claim the full Section 10(13A) HRA exemption directly while filing your Income Tax Return (ITR) and claim a tax refund.