Calculate your exact HRA exemption under Section 10(13A) for FY 2025-26. See which of the three HRA components limits your exemption — and your exact tax saving at your income slab. Old regime only.
City Type
🏙️Metro CityDelhi, Mumbai, Kolkata, Chennai
🏘️Non-Metro CityBangalore, Hyderabad, Pune & all others
Input Mode
📅 Monthly figures
📆 Annual figures
Your Salary & HRA Details
₹
Basic + DA (Dearness Allowance) if DA forms part of retirement benefits
₹
HRA component shown in your salary slip
₹
Actual monthly rent paid to landlord
Used to calculate your actual tax saving
📐 HRA Exemption = Minimum of these three components
A — Actual HRA Received—
B — 50% of Basic Salary (Metro)—
C — Rent Paid − 10% of Basic—
Annual HRA Exemption
—
HRA Received (Annual)
—
Exempt (Annual)
—
Taxable HRA
—
💰 Annual Tax Saving from HRA
—
How to Use This Calculator
1
Select your city type
Metro = Delhi, Mumbai, Kolkata, Chennai only. All other cities including Bangalore, Hyderabad, Pune, Ahmedabad are non-metro. This determines whether 50% or 40% of basic salary is used in component B.
2
Choose monthly or annual figures
Enter either your monthly salary components or annual totals — the calculator handles both. Most salary slips show monthly figures; Form 16 shows annual totals.
3
Enter basic salary, HRA received and rent paid
Basic salary = only the basic component (not CTC). HRA received = HRA shown in your payslip. Rent paid = actual monthly rent you pay your landlord — not including electricity or maintenance.
4
See which component limits your exemption
The lowest of the three components is your HRA exemption. The calculator highlights the limiting component and shows your exact annual tax saving at your income slab.
💡HRA exemption is only available under the old tax regime. If you're currently in the new regime, switching to old regime solely for HRA could save you ₹20,000–₹80,000/year depending on your rent level. Use the Income Tax Calculator to compare both regimes with HRA included.
📐 HRA Exemption Formula
Component AActual HRA received
Component B (Metro)50% of Basic
Component B (Non-Metro)40% of Basic
Component CRent − 10% of Basic
HRA Exempt =Min(A, B, C)
Taxable HRA =HRA Received − Exempt
Section 10(13A) of the Income Tax Act. Only available under old tax regime. Rent payment must be genuine and documented.
🧮 Example — Mumbai, ₹8L Basic
Basic Salary (Annual)₹8,00,000
HRA Received (Annual)₹3,60,000
Rent Paid (Annual)₹2,40,000
A — Actual HRA₹3,60,000
B — 50% of Basic (Metro)₹4,00,000
C — Rent − 10% Basic ★₹1,60,000
HRA Exempt = Min(A,B,C)₹1,60,000
Tax Saving at 30%₹49,920
Component C (Rent − 10% of Basic) is the limiting factor in most cases where rent is moderate relative to salary.
📋 HRA Rules at a Glance
Available underOld regime only
Governing section10(13A)
Metro cities50% of basic
Non-metro cities40% of basic
PAN required (rent > ₹1L/yr)Landlord PAN
Self-owned houseNo HRA exempt
Rent to parents allowed?Yes
Form 12BB required?Yes (employer)
Always submit rent receipts + landlord PAN to your employer at the start of the year. Delayed submission leads to excess TDS deduction throughout the year.
House Rent Allowance (HRA) is a component of your salary package that your employer pays to help cover rental accommodation costs. It is governed by Section 10(13A) of the Income Tax Act, read with Rule 2A of Income Tax Rules. While your employer pays you HRA as part of your salary, a portion of it — calculated using a specific formula — is exempt from income tax.
The HRA exemption reduces your taxable income, directly lowering your tax liability. For a person in the 30% slab earning ₹2 lakh in annual HRA exemption, the tax saving is ₹2,00,000 × 30% × 1.04 (cess) = ₹62,400 per year — a significant amount that should not be left unclaimed. The exemption is available only under the old tax regime and only if you are actually paying rent.
🏠
Reduces Taxable Income
HRA exemption is deducted from gross salary before applying tax slabs — directly reducing your tax bill.
📋
Old Regime Only
Not available under the new tax regime. Must explicitly opt for old regime to claim HRA.
🏙️
Metro vs Non-Metro
Metro cities get 50% of basic salary as component B; all other cities get 40%. Only 4 cities are metro.
📄
Documentation Required
Rent receipts mandatory. Landlord PAN required if annual rent exceeds ₹1 lakh.
HRA Exemption Formula — All Three Components Explained
The HRA exemption is calculated as the minimum (lowest) of three independently computed values. Understanding each component helps you identify which factor is limiting your exemption — and what you can potentially do to increase it.
Section 10(13A) — HRA Exemption Formula
A = Actual HRA received from employer (annual)
B = 50% of Basic Salary (Metro) OR 40% of Basic Salary (Non-Metro)
C = Actual Rent Paid − 10% of Basic Salary (both annual) HRA Exempt = minimum of (A, B, C) — must be ≥ 0
Component A — Actual HRA Received
This is simply the total HRA component paid by your employer in the financial year. If your monthly HRA is ₹20,000, the annual figure is ₹2,40,000. This is the ceiling — you can never claim more than what your employer paid you as HRA. Check your Form 16 Part B or monthly payslip for the exact figure.
Component B — 50% or 40% of Basic Salary
For metro city residents (Delhi, Mumbai, Kolkata, Chennai), component B is 50% of annual basic salary. For all other cities, it is 40%. Note that "basic salary" here means your basic pay plus Dearness Allowance (DA) if the DA is part of your retirement benefit calculation. It does not include special allowance, HRA itself, or other components.
Component C — Rent Paid Minus 10% of Basic
This is the rent you actually paid minus 10% of your annual basic salary. This component ensures that only genuine, significant rent payments attract the exemption — the 10% threshold filters out nominal rent payments. If you pay less rent than 10% of your basic salary, component C is zero and you get no HRA exemption.
Example: Priya in Bangalore — Basic ₹7.2L, HRA ₹3L, Rent ₹18,000/month
Annual Basic = ₹7,20,000 | Annual HRA received = ₹3,00,000 | Annual Rent = ₹18,000 × 12 = ₹2,16,000
A = ₹3,00,000 (Actual HRA)
B = 40% × ₹7,20,000 = ₹2,88,000 (Non-metro — Bangalore)
HRA Exempt = min(₹3,00,000, ₹2,88,000, ₹1,44,000) = ₹1,44,000
Priya's annual HRA exemption = ₹1,44,000. Taxable HRA = ₹3,00,000 − ₹1,44,000 = ₹1,56,000. At 20% slab: tax saving = ₹1,44,000 × 20% × 1.04 = ₹29,952.
💡Component C is the limiting factor for most salaried employees with moderate rent. To maximise HRA exemption: increase rent paid (if affordable), ensure your HRA component in salary is large enough (negotiate at hiring), and if possible move to a metro city where the 50% factor gives a higher component B.
Metro vs Non-Metro — Which Cities Qualify for 50%
Only four cities are classified as "metro" for HRA purposes under the Income Tax Act — regardless of population, economic activity, or tier classification. This list has not changed since the HRA rules were framed and does not include Bangalore, Hyderabad, or Pune despite their large populations and high rental costs.
Category
Cities
Component B Factor
Note
Metro (50% of Basic)
Delhi, Mumbai, Kolkata, Chennai
50%
Also includes NCR, MMR agglomeration
Non-Metro (40% of Basic)
Bangalore, Hyderabad, Pune, Ahmedabad, Surat, Jaipur, and all other cities
40%
Includes all tier-2 and tier-3 cities
Bangalore anomaly: Despite having some of the highest rents in India — ₹30,000–₹80,000/month for a decent 2BHK in Whitefield or Koramangala — Bangalore is non-metro for HRA purposes. This means a Bangalore employee gets only 40% of basic as component B, while a Delhi employee doing an identical job gets 50%. This is one of the most frequently cited tax inequities in the Indian salaried workforce.
⚠️NCR (Noida, Gurgaon, Faridabad, Ghaziabad) is included in Delhi metro for HRA purposes since these are part of the National Capital Region. MMR (Navi Mumbai, Thane) is similarly included under Mumbai. If you work in Gurgaon or Thane, you can use the 50% metro factor.
Documents Needed to Claim HRA Exemption
Your employer will only allow HRA exemption in TDS computation if you submit the required documents through the investment declaration process (typically via an online HR portal at the start of the financial year, with actual proofs submitted in January–February).
Required documents
Rent receipts: For every month (or quarterly). Must include date, amount, landlord name, landlord signature, property address, and your name as tenant.
Rent agreement: A registered or notarised rental agreement for the accommodation.
Landlord PAN: Mandatory if annual rent exceeds ₹1,00,000 (i.e., more than ₹8,333/month). If the landlord has no PAN, a self-declaration to that effect is acceptable.
Form 12BB: The standard declaration form submitted to your employer listing all your tax-saving investments and exemptions including HRA details.
Claiming in ITR if employer didn't give full credit
If you missed submitting documents to your employer on time and excess TDS was deducted, you can still claim the HRA exemption while filing your ITR. Enter the exempt HRA amount under "Exemptions under Section 10" in your ITR form. The excess TDS will be refunded. Keep all rent receipts and the landlord's PAN handy in case of scrutiny.
✅You do not need to attach rent receipts to your ITR. But keep them for 6 years as the Income Tax Department can ask for them during assessment. Digital rent receipts (WhatsApp, email) are acceptable as long as they are complete and signed.
Special HRA Situations — Parents, WFH, Two Homes
Paying rent to parents to claim HRA
This is a completely legal and widely used tax planning strategy. If you live in your parents' house, you can pay them monthly rent and claim HRA exemption — provided the rent is genuine, supported by a rent agreement and receipts, and your parents declare the rental income in their own ITR. Your parents can deduct 30% of the rent as standard deduction for repairs/maintenance, so the net income they pay tax on is 70% of the rent. If your parents are in a lower tax slab (or senior citizens with higher basic exemption), this creates significant family-level tax efficiency.
HRA during work from home (WFH)
If you are working from home but paying rent for the accommodation you are living and working in, you can still claim HRA exemption. The Income Tax Department has not restricted HRA exemption for WFH employees. As long as you are genuinely paying rent for the house where you reside (even if you also work from there), the exemption is valid.
Claiming HRA and home loan interest simultaneously
You can claim both HRA exemption and home loan interest deduction under Section 24(b) if you own a house in one city and live in rented accommodation in another city for work. For example, owning a flat in Pune while working and renting in Mumbai — you can claim HRA for the Mumbai rent and home loan interest for the Pune flat. If both properties are in the same city, the Income Tax Department may question simultaneous claims, so ensure you have sound justification.
💡If you rent to your parents — transfer the agreed rent via bank transfer every month (not cash). This creates a clear digital trail. Have a simple rent agreement on ₹100 stamp paper. Your parents should show this rental income in their ITR under "Income from House Property." This entire arrangement is fully legal and scrutiny-proof when documented properly.
5 HRA Mistakes That Cost Salaried Indians Thousands
Mistake 1 — Not submitting rent receipts to employer on time
✗ Wrong: Forgetting to submit rent receipts until February, resulting in 11 months of excess TDS.
✓ Right: Submit rent receipts and Form 12BB to your employer in April when investment declarations open.
Most employers open investment declaration portals in April and close final submissions in January. If you declare HRA in April, your TDS is correctly computed from the start and you receive the benefit in your monthly take-home throughout the year. If you declare in January, 9 months of excess TDS has already been deducted — you get it back only when you file your ITR 4–7 months later. ₹30,000 in excess TDS held by the government for 7 months is money you could have invested or used.
Mistake 2 — Treating Bangalore, Hyderabad and Pune as metro cities
✗ Wrong: Using 50% of basic salary as component B for a Bangalore-based employee.
✓ Right: Only Delhi, Mumbai, Kolkata, and Chennai are metro for HRA. Bangalore is non-metro — use 40%.
This is a shockingly common error — even committed by some HR portals and payroll software. Using 50% instead of 40% for Bangalore, Hyderabad, Pune, or any other non-metro city overstates component B and leads to an incorrect (higher) HRA exemption claim. If caught during assessment, the excess exemption is reversed with interest and penalty. Always verify your city classification before entering data in investment declaration forms.
Mistake 3 — Not providing landlord PAN when annual rent exceeds ₹1 lakh
✗ Wrong: Claiming HRA on ₹15,000/month rent without providing landlord's PAN to employer.
✓ Right: Annual rent of ₹1,80,000 (₹15,000 × 12) exceeds ₹1 lakh — landlord PAN is mandatory.
If your annual rent exceeds ₹1,00,000 and you don't provide the landlord's PAN, your employer cannot grant the HRA exemption — they will include the full HRA in taxable income and deduct TDS. You can still claim it in ITR with the landlord PAN. If the landlord genuinely doesn't have PAN, get a written declaration from them. But in practice, almost all landlords have PAN today. If your landlord refuses to share PAN, that is a red flag about the rental arrangement itself.
Mistake 4 — Including special allowance in the "basic salary" for HRA calculation
✗ Wrong: Using total CTC or gross salary as "basic salary" in the HRA formula.
✓ Right: Basic salary = only the Basic Pay component on your payslip (plus DA, if applicable).
The "basic salary" in the HRA formula means specifically the basic pay component shown on your payslip — not your gross salary, not your CTC, and not including special allowance, HRA itself, performance bonus, or other components. Using a higher figure inflates component B and C and could result in overclaiming the exemption. Check your payslip carefully — "Basic" is usually the first line and is typically 40–50% of gross salary in most Indian companies.
Mistake 5 — Paying rent in cash instead of bank transfer
✗ Wrong: Paying rent in cash every month and getting only a handwritten receipt.
✓ Right: Pay rent via NEFT, UPI, or cheque every month — creates a digital trail that is assessment-proof.
While cash rent payments are technically claimable, they are extremely difficult to defend in tax scrutiny — especially for higher rent amounts. The Income Tax Department frequently questions HRA claims where no corresponding rent payments appear in the landlord's bank statements or your bank statements. For any rent above ₹5,000/month, always pay via UPI, NEFT, or post-dated cheque. This creates a paper trail that is irrefutable and takes 30 seconds to set up as a standing instruction.
🏠 Calculate Your HRA Exemption — Free & Instant
See exactly which of the three components limits your HRA exemption and how much tax you save. Use the Income Tax Calculator to compare old vs new regime with HRA included.
HRA exemption under Section 10(13A) is the minimum of three amounts: (A) Actual HRA received from employer annually, (B) 50% of annual basic salary for metro cities (Delhi, Mumbai, Kolkata, Chennai) or 40% for non-metro cities, and (C) Actual annual rent paid minus 10% of annual basic salary. The lowest of these three values is your tax-exempt HRA. Any HRA received above the exempt amount is added to taxable income and taxed at your slab rate.
Only four cities are classified as metro for HRA purposes under the Income Tax Act: Delhi (including NCR — Noida, Gurgaon, Faridabad, Ghaziabad), Mumbai (including MMR — Navi Mumbai, Thane), Kolkata, and Chennai. All other cities — including Bangalore, Hyderabad, Pune, Ahmedabad, Jaipur, and all tier-2 and tier-3 cities — are non-metro. Metro cities use 50% of basic salary as component B; non-metro uses 40%.
No. HRA exemption under Section 10(13A) is only available under the old tax regime. The new regime (default from FY 2023-24) does not allow most exemptions and deductions including HRA, LTA, 80C, 80D, and home loan interest. If you want to claim HRA exemption, you must explicitly opt for the old tax regime — either when declaring your choice to your employer at the start of the year or when filing your ITR. Salaried employees can switch between regimes every year.
Yes — paying rent to your parents and claiming HRA exemption is completely legal. You need a valid rent agreement with your parents as landlords, monthly rent receipts, and their PAN (if annual rent exceeds ₹1 lakh). Your parents must declare this rental income in their ITR — they can deduct 30% as standard deduction for maintenance, so they only pay tax on 70% of the rent. This strategy is especially effective if your parents are in a nil or 5% tax slab, creating significant family tax savings while the rent payments also genuinely help them financially.
Yes. To get HRA exemption reflected in your employer's TDS computation, you must submit rent receipts to your employer — typically through your company's investment declaration portal. For annual rent above ₹1 lakh, you must also provide the landlord's PAN. If you miss the employer submission deadline, you can still claim the exemption directly in your ITR without attaching receipts — but keep them for at least 6 years in case of scrutiny. Always pay rent via bank transfer to create a verifiable digital trail.
You cannot claim HRA if you live in your own house — HRA exemption requires you to be actually paying rent for your accommodation. However, if you own a house in one city and live on rent in another city where you work, you can claim HRA for the rented accommodation. You can also simultaneously claim home loan interest deduction (Section 24(b)) for the owned property. If you own and live in a house in the same city while choosing to rent nearby, the Income Tax Department may question simultaneous claims.
If you don't submit rent receipts and Form 12BB to your employer, they will include the full HRA in your taxable salary and deduct TDS accordingly throughout the year. You will receive less take-home pay every month. However, you can still claim the HRA exemption when filing your ITR — enter the exempt amount under Section 10 exemptions. The excess TDS already paid will be credited against your tax liability and refunded. The downside is the delay — the refund comes 4–7 months after year-end. Submitting to your employer in April avoids this entirely.
There is no statutory upper limit on HRA exemption — it depends entirely on the minimum of the three components specific to your salary and rent. In practice, the exemption is limited by component C (Rent − 10% of Basic) for most employees with moderate rent relative to salary. For a person with basic salary ₹12 lakh, paying ₹3.6 lakh rent annually in a metro city: A = HRA received (say ₹5L), B = 50% × ₹12L = ₹6L, C = ₹3.6L − ₹1.2L = ₹2.4L. Exemption = ₹2.4 lakh. Increasing rent paid increases component C and can increase the exemption up to the limit set by A or B.
About ToolLoom — We build free tools for Indian students, professionals and creators. HRA rules verified against Section 10(13A) of the Income Tax Act and Rule 2A of Income Tax Rules. This tool is for FY 2025-26 (AY 2026-27). Consult a chartered accountant for personalised tax advice. Found an error? Email contact@toolloom.in
📅 May 2026 · Written by the ToolLoom Team · Reviewed for accuracy May 2026