HRA Exemption Calculator
Find out how much of your House Rent Allowance is tax-free (FY 2026-27, old tax regime)
What Is HRA Exemption?
If you’re salaried and live in a rented home, your salary probably includes a House Rent Allowance (HRA). Part of that HRA can be tax-free, which can cut your tax bill by tens of thousands of rupees a year. But how much is tax-free isn’t simply “whatever rent you pay” – it depends on a specific rule involving your salary, your rent and your city.
The calculator above works it out for you, shows which limit applies, and estimates how much tax you save.
How to Use the HRA Calculator
Step 1 – Enter your monthly basic salary plus DA, as shown on your payslip.
Step 2 – Enter the HRA you receive each month, and the rent you pay.
Step 3 – Choose whether you live in a metro city and select your income tax slab.
You’ll see your tax-free HRA, the taxable part, the tax you save, and a breakdown of the three limits with the one that applies to you highlighted.
The HRA Formula: Lowest of Three
Your tax-free HRA is the lowest of these three amounts, worked out for the year:
- The HRA you actually receive from your employer
- The rent you pay, minus 10% of your basic salary (plus DA)
- 50% of your basic salary if you live in a metro city, or 40% elsewhere
Whatever HRA is left after the exemption is added to your taxable salary.
Example: Your basic salary is ₹50,000 a month, you receive ₹20,000 HRA and pay ₹18,000 rent in Mumbai. For the year:
- HRA received: ₹2,40,000
- Rent minus 10% of basic: ₹2,16,000 – ₹60,000 = ₹1,56,000
- 50% of basic: ₹3,00,000
The lowest is ₹1,56,000, so that much is tax-free and the remaining ₹84,000 is taxable. In the 30% slab, that saves you about ₹48,672 a year.
New for 2026: Four More Cities Count as Metros
From FY 2026-27, the new Income-tax Rules add Bengaluru, Hyderabad, Pune and Ahmedabad to the list of metro cities for HRA, alongside Mumbai, Delhi, Kolkata and Chennai. If you rent in one of these four cities, the third limit rises from 40% to 50% of your basic salary.
Here’s what that can mean. Say your basic salary is ₹50,000 a month, you receive ₹25,000 HRA and pay ₹30,000 rent in Bengaluru:
| Before (40% rule) | From FY 2026-27 (50% rule) | |
|---|---|---|
| HRA received | ₹3,00,000 | ₹3,00,000 |
| Rent minus 10% of basic | ₹3,00,000 | ₹3,00,000 |
| % of basic salary | ₹2,40,000 | ₹3,00,000 |
| Tax-free HRA | ₹2,40,000 | ₹3,00,000 |
That’s ₹60,000 more tax-free income – about ₹18,720 less tax a year in the 30% slab.
HRA Only Works in the Old Tax Regime
This is the most important thing to know: HRA exemption is not available under the new tax regime, which is the default. If you choose the new regime, your entire HRA is taxable.
So the real question is whether your HRA exemption, plus your other deductions like 80C and home loan interest, is big enough to make the old regime cheaper. For many renters in big cities, it is. Check your numbers with our Income Tax Calculator, which includes this same HRA calculation.
Rules and Documents You’ll Need
- Rent receipts or a rent agreement – your employer will ask for proof.
- Landlord’s PAN – required if your rent is more than ₹1 lakh a year.
- Paying rent to your parents is allowed if they own the home and declare the rent as income in their tax return. Paying rent to your spouse generally isn’t accepted.
- Missed telling your employer? You can still claim HRA exemption when you file your income tax return, if you choose the old regime.
- No HRA in your salary? If you’re self-employed or your salary has no HRA component, you may be able to claim a deduction for rent under Section 80GG instead, up to ₹5,000 a month, in the old regime.
Questions People Actually Ask Us
Can I claim HRA and home loan interest together? Yes, in the old regime – for example, if you own a home in one city but rent in another city where you work. Both have their own rules, so keep documents for each.
Why is my tax-free HRA so low even though I pay high rent? Because the exemption is capped by the lowest of the three limits. If your HRA or your basic salary is low compared with your rent, one of those becomes the limit.
Does DA count as salary for HRA? Only if your dearness allowance counts towards your retirement benefits under your terms of employment. Commission based on a fixed percentage of sales also counts.
Is the calculation monthly or yearly? The rule applies to the period you actually lived in rented accommodation. If you rented for only part of the year, the exemption is worked out for those months only. The calculator assumes you rented for the full year.
Disclaimer: This calculator is for educational purposes only and assumes you rented for the full financial year. Tax saved is an estimate based on the slab you select and includes 4% cess. Tax rules can change – please verify with official sources or consult a chartered accountant. This calculator has no connection to the Income Tax Department. See our full Disclaimer.
Also Try These Calculators on TappingMoney:
- Income Tax Calculator – Compare the old and new tax regimes
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- EMI Calculator – Work out your home loan EMI
- PPF Calculator – Tax-free long-term savings
Page last updated: September 2026 | Free to use | No sign-up needed