HRA Exemption Calculator
Exempt house rent allowance under the old regime, with the eight 50% cities.
Inputs
This exemption only exists under India's old tax regime. The new regime (the default) doesn't allow it at all — it won't reduce tax on this site's income-tax or TDS calculators, even though the amount below is still correctly calculated.
- Exempt₹15,000(60%)
- Taxable₹10,000(40%)
- Taxable HRA
- ₹10,000
- HRA received
- ₹25,000
- Rent − 10% of basic
- ₹15,000
- City limit
- ₹25,000
- Exemption is the least of: actual HRA, rent paid minus 10% of basic, and 50% (metro) or 40% (non-metro) of basic.
- Simplified estimate — actual exemption depends on salary structure and regime.
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What each HRA Exemption input means
- Basic salary (monthly)
- Monthly basic pay, plus dearness allowance if your employer counts it for retirement benefits. Leave out HRA itself, conveyance and other allowances; using gross pay overstates two of the three limits.
- HRA received (monthly)
- The house rent allowance on your payslip for the month.
- Rent paid (monthly)
- Rent you actually pay each month for the home you live in. Rent paid to parents counts if they really receive it and declare it as income.
- City you live in
- From Tax Year 2026-27, eight cities get the 50% limit: Delhi, Mumbai, Kolkata, Chennai, Ahmedabad, Bengaluru, Hyderabad and Pune. Everywhere else uses 40%. For 2025-26 and earlier, only the first four counted.
HRA Exemption formula
Exempt HRA = least of (HRA received, rent paid − 10% of salary, 50% of salary in a metro or 40% elsewhere)
House rent allowance is exempt only up to the least of three amounts: the HRA you actually received, the rent you paid minus 10% of your salary, and 50% of your salary if you live in one of eight cities, or 40% anywhere else. From Tax Year 2026-27 the eight are Delhi, Mumbai, Kolkata and Chennai, as before, plus Ahmedabad, Bengaluru, Hyderabad and Pune, added by the Income-tax Rules, 2026. 'Salary' here means basic pay plus dearness allowance where it counts for retirement benefits, not your whole pay. Whatever HRA is left over is taxed with the rest of your salary. The exemption exists only under the old regime; the new regime, the default, has no HRA exemption at all.
HRA Exemption worked example
With ₹50,000 basic, ₹25,000 HRA and ₹20,000 rent in a metro, the three limits are ₹25,000 (HRA received), ₹15,000 (rent minus ₹5,000) and ₹25,000 (half of basic). The least is ₹15,000, so that much is exempt each month and ₹10,000 of HRA is taxed.
More HRA Exemption examples
Outside a metro, with ₹40,000 basic, ₹16,000 HRA and ₹15,000 rent, the limits are ₹16,000 received, ₹11,000 (rent minus ₹4,000) and ₹16,000 (40% of basic). ₹11,000 is exempt and ₹5,000 taxed: here the rent is what limits the exemption.
Paying low rent against a large allowance costs most of the exemption: with ₹60,000 basic, ₹30,000 HRA and ₹12,000 rent in a metro, rent minus 10% of basic is only ₹6,000, so ₹6,000 is exempt and ₹24,000 of the allowance is taxed.
Where the HRA Exemption calculator can give the wrong answer
- If you live in a home you own, or pay no rent, none of the HRA is exempt; the calculator still runs but the exempt amount will be ₹0.
- To claim it you need rent receipts, and your landlord's PAN if the year's rent exceeds ₹1 lakh. The calculator doesn't check paperwork.
- Basic pay must exclude HRA, conveyance and other allowances; using gross pay overstates the city and rent limits.
- The exemption is worked out month by month. If your rent or salary changes during the year, work out each period separately and add them.
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HRA Exemption reference table
| Monthly rent | Rent − 10% of basic | 50% of basic | HRA exempt | HRA taxed |
|---|---|---|---|---|
| ₹8,000 | ₹3,000 | ₹25,000 | ₹3,000 | ₹22,000 |
| ₹10,000 | ₹5,000 | ₹25,000 | ₹5,000 | ₹20,000 |
| ₹15,000 | ₹10,000 | ₹25,000 | ₹10,000 | ₹15,000 |
| ₹20,000 | ₹15,000 | ₹25,000 | ₹15,000 | ₹10,000 |
| ₹25,000 | ₹20,000 | ₹25,000 | ₹20,000 | ₹5,000 |
| ₹30,000 | ₹25,000 | ₹25,000 | ₹25,000 | ₹0 |
| ₹40,000 | ₹35,000 | ₹25,000 | ₹25,000 | ₹0 |
HRA Exemption FAQ
- From Tax Year 2026-27, eight: Delhi, Mumbai, Kolkata and Chennai, plus Ahmedabad, Bengaluru, Hyderabad and Pune, which the Income-tax Rules, 2026 added. Every other city uses the 40% limit. For 2025-26 and earlier only the original four counted.
- No. HRA is exempt only if you choose the old regime. Under the new regime, the default, the whole allowance is taxed, which is why this site's income tax and TDS calculators ignore it.
- Yes, if you actually pay them rent and they declare it as income. The maths is the same; keep a rent agreement, and their PAN if the year's rent exceeds ₹1 lakh.
- Basic pay plus dearness allowance where it forms part of retirement benefits, and commission paid as a fixed percentage of turnover. HRA itself and other allowances are not included.
- The cities. The Income-tax Rules, 2026, which came with the new Income-tax Act on 1 April 2026, extended the 50% limit to Ahmedabad, Bengaluru, Hyderabad and Pune. For someone in Bengaluru with ₹50,000 basic, the city limit rises from ₹20,000 to ₹25,000 a month. The least-of-three rule itself is unchanged.