HRA Exemption Calculator
HRA Exemption Calculator
Calculate your House Rent Allowance tax exemption under Section 10(13A) and optimize your tax savings on rental payments
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HRA Exemption Results
Here's your HRA exemption calculation as per Section 10(13A)
Basic Salary
HRA Received
Rent Paid
City Type
Exempted HRA
Taxable HRA
Estimated Tax Savings
Based on an approximate tax rate of 20%
How to Use the HRA Exemption Calculator
Enter Basic Salary
Enter your monthly basic salary component as shown in your salary slip
Enter HRA Received
Input the monthly House Rent Allowance amount you receive from your employer
Enter Rent Paid
Enter the monthly rent you pay for your accommodation
Select City Type
Choose whether you live in a metro city (50%) or a non-metro city (40%)
Understanding the Results
After clicking "Calculate HRA Exemption," you'll see the following results:
- Exempted HRA: The amount that is exempt from income tax
- Taxable HRA: The portion of your HRA that is taxable
- Estimated Tax Savings: Approximate tax you save through this exemption
- Detailed Breakdown: Complete calculation with all components
Additional Features
- Download PDF report with all calculation details
- Visual chart showing exempted vs. taxable HRA
- Save calculation history for future reference
- Detailed breakdown of how the exemption is calculated
When to Use This Calculator
- When planning your tax saving strategy for the financial year
- After receiving your salary structure from your employer
- When deciding on a rental property within your budget
- Before submitting HRA exemption details to your employer
How HRA Exemption Calculation Works
The Three-Step Calculation Process
Step 1: First Amount
The actual HRA received from your employer as shown in your salary slip.
Example: If you receive ₹20,000 as monthly HRA, this amount is ₹20,000.
Step 2: Second Amount
The rent paid minus 10% of your basic salary.
Example: If you pay ₹15,000 rent and your basic salary is ₹50,000, this amount is: ₹15,000 - (10% × ₹50,000) = ₹15,000 - ₹5,000 = ₹10,000.
Step 3: Third Amount
50% of basic salary for metro cities or 40% of basic salary for non-metro cities.
Example: For a metro city with ₹50,000 basic salary, this is 50% × ₹50,000 = ₹25,000.
Final Exemption Amount
Your HRA exemption will be the lowest of the three amounts calculated above.
In our example: The exemption would be ₹10,000 (the lowest of ₹20,000, ₹10,000, and ₹25,000).
Applying HRA Exemption to Your Taxes
Tax Impact Calculation
- Your exempted HRA amount is deducted from your total income before calculating taxes
- The remaining HRA (if any) is added to your taxable income
- This reduction in taxable income leads to lower tax liability
- The tax saving depends on your income tax slab rate
Tax Savings Example
Assuming you're in the 20% tax bracket:
| Scenario | Monthly Exemption | Annual Tax Saving |
|---|---|---|
| Low Rent | ₹5,000 | ₹12,000 |
| Medium Rent | ₹10,000 | ₹24,000 |
| High Rent | ₹20,000 | ₹48,000 |
* Tax savings = Monthly Exemption × 12 months × 20% tax rate
Understanding HRA Exemption
What is HRA?
House Rent Allowance (HRA) is a component of salary provided by employers to employees to meet rental expenses. It is partially exempt from income tax under Section 10(13A) of the Income Tax Act.
The amount of exemption depends on factors such as your basic salary, actual HRA received, rent paid, and whether you live in a metro or non-metro city.
The "Least of Three Rule"
According to Section 10(13A), HRA exemption is calculated as the least of:
- Actual HRA received from employer
- Rent paid minus 10% of basic salary
- 50% of basic salary (for metro cities) or 40% of basic salary (for non-metro cities)
Documentation Required for HRA Exemption
Basic Requirements
- Rent receipts showing the rent amount, period, address, and landlord's name and signature
- Rent agreement (if required by your employer)
- Form 12BB declaration for tax-saving investments and expenditures
For High Rent Payments
- Landlord's PAN (mandatory if annual rent exceeds ₹1 lakh)
- Declaration from landlord if they don't have a PAN
- Proof of rent payment through banking channels
- Rent paid in cash is generally not advisable for tax purposes
Metro vs. Non-Metro Cities
| City Type | HRA Exemption % | Included Cities |
|---|---|---|
| Metro Cities | 50% of Basic Salary | Delhi (NCR), Mumbai, Kolkata, Chennai |
| Non-Metro Cities | 40% of Basic Salary | All other cities and towns in India |
Note: For tax purposes, only Delhi, Mumbai, Kolkata, and Chennai are officially considered metro cities. Cities like Bangalore, Hyderabad, and Pune are considered non-metro cities for HRA calculation despite being major urban centers.
Special Cases
Living in Own House
If you live in your own house, you cannot claim HRA exemption. Consider home loan tax benefits under Section 24 and 80C instead.
No HRA in Salary Structure
If your employer doesn't provide HRA, you can claim deduction for rent paid under Section 80GG (with certain conditions and limits).
Paying Rent to Parents
You can claim HRA exemption if you pay rent to your parents, but they must declare it as rental income and you should have proper documentation.
Tax Benefits of HRA
Claiming HRA exemption can significantly reduce your taxable income. Here's how it helps:
- Lower Tax Liability: The exempted portion of HRA is not added to your taxable income, reducing your overall tax burden.
- Effective Tax Planning: By optimizing your rent payments, you can maximize your HRA exemption and minimize taxes.
- Combined Benefits: You can claim both HRA exemption and home loan tax benefits simultaneously if you own a house in one city but work and live in a rented accommodation in another city.
- Annual Savings: For a person in the 20% tax bracket, an HRA exemption of ₹10,000 per month can save approximately ₹24,000 in taxes annually.
Frequently Asked Questions
Can I claim HRA exemption if I live in my own house?
No, you cannot claim HRA exemption if you live in a house owned by you. HRA exemption is only available when you live in a rented accommodation and pay rent. If you own a house and have a home loan, you may instead be eligible for tax benefits under Section 24 for interest paid and Section 80C for principal repayment.
Can I claim HRA if I pay rent to my parents?
Yes, you can claim HRA exemption if you pay rent to your parents, provided you have a formal rental agreement and the rent is paid through banking channels (not cash). Your parents will need to declare this rental income in their tax returns. However, the tax department may scrutinize such arrangements more closely, so ensure all documentation is proper.
What if I don't receive HRA from my employer?
If your employer doesn't provide HRA as part of your salary structure, you can still claim deduction for rent paid under Section 80GG of the Income Tax Act, subject to certain conditions. The deduction available under Section 80GG is the least of:
- Rent paid minus 10% of total income
- ₹5,000 per month
- 25% of total income
Is PAN of the landlord mandatory for HRA exemption?
If your annual rent exceeds ₹1 lakh (₹8,333 per month), you are required to provide the PAN (Permanent Account Number) of your landlord to claim HRA exemption. If your landlord doesn't have a PAN, they should provide a declaration to that effect. For rent below ₹1 lakh annually, the landlord's PAN is not mandatory, but rent receipts are still required.
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