HRA Exemption Calculator

House Rent Allowance exemption is one of the largest tax breaks available to salaried tenants under the old tax regime — and one of the most confusing, because it isn't simply "HRA received is tax-free." The exempt amount is the smallest of three separate figures, and most people have never seen all three laid out side by side to understand which one actually binds.

The three figures: the actual HRA your employer pays you, your annual rent minus 10% of your basic salary (rent below that 10% threshold gives zero exemption — the law assumes you'd pay some rent regardless of any allowance), and 50% of basic salary if you live in a metro (Delhi, Mumbai, Kolkata, Chennai) or 40% elsewhere. Whichever of the three is smallest is what you can claim exempt; the rest of your HRA becomes taxable income. This calculator computes and displays all three so you see exactly which constraint is binding for you.

Two situations trip people up. If you own your home (or live with parents rent-free) and don't pay rent, you can't claim any HRA exemption regardless of the allowance in your salary structure. And this exemption only applies under the old tax regime — the new regime (now the default) offers no HRA exemption at all, so factor that into your regime choice with the income tax calculator. Keep rent receipts and, for annual rent above ₹1 lakh, your landlord's PAN — your employer will ask for both to process the exemption.