HRA Exemption Calculator
Calculate your HRA tax exemption under Section 10(13A) — minimum of 3 statutory conditions.
Salary & Rent Details
Per monthly
Per monthly — usually 0 for private sector
Per monthly
Per monthly
Three Conditions (Section 10(13A))
HRA Exemption = Minimum of the three amounts below
Condition 1 — Actual HRA Received
₹2,40,000
HRA Received (annual)
Condition 2 — 50% of Basic+DA
₹3,00,000
50% × ₹6,00,000
Condition 3 — Excess Rent over 10% of Basic+DA
₹1,56,000
₹2,16,000 − 10% × ₹6,00,000
Your HRA Tax Summary
HRA Exemption
₹1,56,000
Tax-free annually
Taxable HRA
₹84,000
Added to gross income
Tax Saved
₹7,800
Estimated savings
Exemption %
65%
Of HRA received
📋 Rent Receipt & Documentation Rules
When rent receipts are needed:
- Rent above ₹3,000/month — receipts required
- Receipts must have landlord signature & stamp
- Include: period, amount, address, tenant name
PAN of landlord required when:
- Annual rent exceeds ₹1,00,000 (₹8,333/month)
- Submit Form 12BB to employer
- Landlord's PAN mandatory; if no PAN — declaration on plain paper
Note: HRA exemption is only available under the Old Tax Regime. If you opt for the New Regime, HRA is fully taxable.
HRA Exemption Under Section 10(13A): Complete Guide 2026
House Rent Allowance (HRA) is one of the most valuable tax exemptions for salaried employees in India, potentially saving anywhere from ₹20,000 to ₹2,00,000+ in taxes annually depending on your salary and city. The exemption is calculated using three conditions under Section 10(13A) read with Rule 2A, and the lowest of the three is your tax-free HRA.
The three conditions act as safeguards: Condition 1 ensures you can't claim more than what you actually receive. Condition 2 ties the exemption to your salary level (50% for expensive metros, 40% for other cities). Condition 3 ensures the benefit is proportional to actual rent paid above a threshold (10% of salary). Together, they prevent abuse while giving genuine relief to employees facing high urban rents.
📐 HRA Exemption Formula & Worked Example
HRA Exemption = MIN(C1, C2, C3)
C1 = Actual annual HRA received
C2 = 50% × Annual (Basic+DA) for metro / 40% for non-metro
C3 = Annual Rent Paid − 10% × Annual (Basic+DA)
✏️ Worked Example — Senior Software Engineer, Bengaluru
HRA Exemption = ₹2,88,000/year (100% exempt! 🎉)
Tax saved @ 30% slab = ₹89,856/year
💡 HRA Optimization Strategies
Optimal Rent-to-Salary Ratio
For maximum HRA exemption, your monthly rent should be at least 10% more than your HRA received. If HRA = ₹20K/month and Basic = ₹50K, pay at least ₹25K rent (₹20K HRA + ₹5K = 10% of ₹50K). Paying less means Condition 3 limits your exemption.
City Classification Matters
Only Mumbai, Delhi, Kolkata, and Chennai are 'metro' (50% HRA). Bengaluru, Hyderabad, Pune, Ahmedabad are non-metro (40%). If you're in a non-metro paying metro-level rents (₹40,000+), consider negotiating a higher HRA component in your salary during appraisals.
Part-Year HRA Claim
You can claim HRA for only the months you actually paid rent. If you shifted from own house to rented mid-year, claim proportionally. Employers will deduct TDS on full HRA initially — you can claim the correct exemption while filing ITR and get refund of excess TDS.
Compare Old vs New Regime Carefully
Calculate both regimes before deciding. Example: For ₹12L income with ₹2L HRA exemption + ₹1.5L 80C + ₹25K 80D = ₹3.75L deductions: Old regime taxable income = ₹8.25L, tax ~₹67,600. New regime taxable = ₹11.25L, tax ~₹49,500. New regime wins here despite losing HRA!
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Frequently Asked Questions
What is HRA exemption under Section 10(13A)?
House Rent Allowance (HRA) exemption is a tax benefit for salaried employees paying rent. The exemption is the MINIMUM of three conditions: (1) Actual HRA received annually, (2) 50% of Basic+DA for metro cities (Mumbai, Delhi, Kolkata, Chennai) or 40% for non-metro, (3) Annual rent paid minus 10% of annual Basic+DA. This is governed by Section 10(13A) of the Income Tax Act and Rule 2A.
When is 50% vs 40% of Basic+DA used for HRA?
50% of Basic+DA applies for the four metro cities: Mumbai, Delhi, Kolkata, and Chennai. 40% applies for all non-metro cities including Bengaluru, Hyderabad, Pune, Ahmedabad, and all other tier-2/tier-3 cities. Note that Bengaluru, despite being a major city, is classified as non-metro for HRA purposes — 40% applies there.
When do you need rent receipts and landlord PAN?
Rent receipts are required when rent exceeds ₹3,000/month. Landlord's PAN is mandatory when annual rent exceeds ₹1,00,000 (₹8,333/month). Rent receipts must include: landlord's full name and address, tenant's name, rent amount, period covered, property address, revenue stamp if cash payment, and landlord's signature. Submit to employer via Form 12BB.
Can I claim HRA exemption by paying rent to parents?
Yes, you can pay rent to parents and claim HRA exemption — it's legally valid and even recognized by the Supreme Court. Requirements: (1) Parents must own the house, (2) Rent must actually be paid (bank transfer recommended, not cash), (3) Parents must declare rental income in their ITR, (4) Rental agreement or at least a declaration is advisable, (5) Landlord's PAN must be submitted if annual rent exceeds ₹1L.
Is HRA available under the New Tax Regime 2025-26?
No. HRA exemption under Section 10(13A) is ONLY available under the Old Tax Regime. Under the New Tax Regime (default from FY 2024-25), your full HRA received is taxable. If you receive significant HRA and pay substantial rent, compare: old regime with HRA exemption + 80C vs new regime with lower rates. For metro employees with HRA above ₹20,000/month, old regime may save more.
How to calculate HRA exemption — worked example?
Example: Basic+DA = ₹50,000/month. HRA received = ₹20,000/month. Rent paid = ₹25,000/month. City: Mumbai (metro). Annual values: Basic+DA = ₹6L, HRA = ₹2.4L, Rent = ₹3L. Condition 1 = ₹2.4L. Condition 2 = 50% × ₹6L = ₹3L. Condition 3 = ₹3L − 10% × ₹6L = ₹3L − ₹60K = ₹2.4L. Exemption = Min(₹2.4L, ₹3L, ₹2.4L) = ₹2,40,000/year. Taxable HRA = ₹2.4L − ₹2.4L = ₹0 (fully exempt!).
What if I work from home and pay rent — can I still claim HRA?
Yes, you can claim HRA even if working from home, provided you actually pay rent for rented accommodation. The IT Act doesn't require that the residence be your official 'workplace'. However, if you work from home AND own the house (claiming home loan deduction), the ITO might scrutinize if you also claim HRA. Ensure the rent payment is genuine and well-documented.
Can I claim both HRA exemption and home loan interest deduction?
Yes, in specific situations. If you own a house in City A but work in City B and rent a house there, you can claim: HRA exemption on the rent paid in City B, AND home loan deduction (Section 24(b)) on the loan for the house in City A. But if you own AND live in the same house while paying a sham rent, this won't be allowed. The key is that there must be a genuine reason for renting.
What documents should I maintain for HRA claim during IT scrutiny?
Maintain: (1) Rent agreement for each year, (2) Monthly rent receipts with revenue stamps (if cash), (3) Bank statements showing rent transfers, (4) Landlord's PAN photocopy (if rent >₹8,333/month), (5) Form 12BB submitted to employer, (6) Landlord's ITR showing rental income (if possible). Keep documents for 7 years as IT department can select older years for scrutiny under Section 143(3).