HRA Exemption Calculator
IndiaSee which of the three rules binds, how much HRA is tax-free, and the tax it saves — old regime only.
Your salary & rent
basic pay plus DA where it counts toward benefits.
Only Delhi, Mumbai, Kolkata and Chennai use the 50% limit.
used for the old-vs-new regime and with-vs-without tax sections.
used only for the headline tax-saved estimate (+4% cess).
Results update live — calculations run in your browser, no signup.
₹34,944/yr
70% of your HRA is tax-free — the rent − 10% basic rule binds · saves ₹2,912/mo
Your exemption is the smallest of the three rules
The rent − 10% basic rule caps it — ₹6.0K/mo of HRA remains taxable.
Applies under the old regime only. The tax saved is an estimate at your 20% slab (+4% cess) — not tax advice.
Your exemption is the smallest of these three — the card flagged below is the one that binds.
Rule 1
Actual HRA received
₹20,000
Rule 2
Rent paid − 10% of basic
₹14,000
Rule 3
50% of basic (metro)
₹20,000
The smallest figure — ₹14,000 from the rent − 10% basic rule — is your monthly exemption. That makes ₹6,000 of your HRA taxable each month (₹72,000a year). A higher HRA component alone won't raise the exemption unless the binding rule also moves.
The full working
Each rule and the binding minimum, on both a monthly and annual basis — exactly how the exemption is derived.
| Rule | Monthly | Annual | Status |
|---|---|---|---|
| Actual HRA received | ₹20,000 | ₹2.40 L | — |
| Rent paid − 10% of basic | ₹14,000 | ₹1.68 L | Binds (exempt) |
| 50% of basic (metro) | ₹20,000 | ₹2.40 L | — |
| Exemption (least of three) | ₹14,000 | ₹1.68 L | tax-free |
On ₹12.00 L gross income — HRA exemption only reduces the old regime.
Old regime (with HRA)
claims ₹1.68 L HRA exemption
₹1,13,256
total tax payable (incl. 4% cess)
New regime (no HRA)
HRA exemption not allowed
₹0
total tax payable (incl. 4% cess)
Tax figures use the FY 2025-26 slabs, standard deduction, 87A rebate and 4% cess for a resident individual below 60 — the same engine as our income-tax calculator.
Without HRA vs with HRA (old regime)
What the exemption actually shaves off your old-regime tax bill.
Old-regime tax — no HRA
₹1,63,800
full HRA taxed
Old-regime tax — with HRA
₹1,13,256
₹1.68 L exempted
Tax you actually save
₹50,544
from the engine, not the slab estimate
Computed by running the exact income-tax engine twice — once with your ₹1.68 L HRA exemption as an old-regime deduction, once without. This precise figure can differ from the 20% slab estimate because your exemption may straddle slab boundaries.
Metro vs non-metro impact
The same salary and rent, under the 50% (metro) and 40% (non-metro) city limits.
Metro (50% of basic)
₹14.0K/mo
₹1.68L/yr exempt
Non-metro (40% of basic)
₹14.0K/mo
₹1.68L/yr exempt
If your rent increases
Exemption only rises while the rent rule stays the binding one.
| Rent /mo | Exempt /mo | Tax saved /yr |
|---|---|---|
| ₹14,400 | ₹10,400 | ₹25,958 |
| ₹16,200 | ₹12,200 | ₹30,451 |
| ₹18,000now | ₹14,000 | ₹34,944 |
| ₹19,800 | ₹15,800 | ₹39,437 |
| ₹21,600 | ₹17,600 | ₹43,930 |
| ₹24,300 | ₹20,000 | ₹49,920 |
If your basic salary changes
A higher basic lifts the city cap but also raises the 10% rent threshold.
| Basic /mo | Exempt /mo | Tax saved /yr |
|---|---|---|
| ₹32,000 | ₹14,800 | ₹36,941 |
| ₹36,000 | ₹14,400 | ₹35,942 |
| ₹40,000now | ₹14,000 | ₹34,944 |
| ₹44,000 | ₹13,600 | ₹33,946 |
| ₹48,000 | ₹13,200 | ₹32,947 |
| ₹54,000 | ₹12,600 | ₹31,450 |
What moves your exemption
Rent vs 10% of basic· binds now
Only rent above ₹4.0K/mo (10% of basic) counts — pay less and the exemption shrinks fast.
50% city cap
Your basic caps the city rule at ₹20.0K/mo. A higher basic lifts this ceiling.
HRA component
You can never exempt more than the ₹20.0K/mo HRA you actually receive.
Yearly tax saving timeline
Rent, exemption and tax saved cumulated over the years you stay on rent.
| Years on rent | Rent paid | Exempt (tax-free) | Tax saved |
|---|---|---|---|
| 1 year | ₹2.16 L | ₹1.68 L | ₹34,944 |
| 2 years | ₹4.32 L | ₹3.36 L | ₹69,888 |
| 3 years | ₹6.48 L | ₹5.04 L | ₹1.05 L |
| 5 years | ₹10.80 L | ₹8.40 L | ₹1.75 L |
| 10 years | ₹21.60 L | ₹16.80 L | ₹3.49 L |
Assumes your salary, rent and slab hold steady — a simple cumulative view, not an inflation-adjusted projection.
- 70% of your ₹20,000 HRA is tax-free — the rent − 10% basic rule caps it.
- At a 20% slab (plus cess) the exemption saves about ₹34,944/yr.
- Rent is 18% of income — inside the healthy 20–30% band.
Are you maximising your HRA?
Share of your HRA component that ends up tax-free.
70% of your ₹20,000 HRA is exempt — the rest stays taxable because the rent − 10% basic rule caps it.
HRA health check
Your annual rent as a share of gross income — the ideal band is 20–30%.
18%
rent-to-income ratio
Rent is a small slice of income — comfortable, though you're not using HRA to its fullest.
Your rent breakdown (annual)
How your yearly HRA splits into a tax-free slice and a still-taxed slice.
Annual rent
what you pay
HRA received
per year
Exempt (tax-free)
least of three
Taxable HRA
still taxed
Tax saved
at 20% slab
Every ₹100 of rent
What this means
Of the ₹20,000 HRA you receive each month, ₹14,000 is exempt and ₹6,000 is taxable, because the rent − 10% basic rule is the smallest of the three. At a 20% marginal slab (plus 4% cess) that exemption is worth about ₹34,944 a year in tax — under the old regime only. After that saving, your rent effectively costs ₹1.81 L a year.
Key takeaways
- Monthly exemption: ₹14,000 (₹1.68 L/yr)
- Binding rule: Rent − 10% basic at ₹14,000
- Taxable HRA: ₹6,000/mo
- Exempt share of HRA: 70%
- Est. tax saved: ₹34,944/yr at 20% slab
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Your HRA exemption of ₹1.68L/yr saves about ₹34.9K in tax under the old regime.
Plan the rest of your money life
Put this exemption in context — regime choice, in-hand pay, and the tax you owe.
HRA exemption is the least of: (1) actual HRA received, (2) rent paid minus 10% of basic salary, and (3) 50% of basic for metro cities or 40% for non-metro. It applies only under the oldtax regime — the new regime allows no HRA exemption. “Basic” here means basic pay plus DA where applicable. The headline tax saved is an estimate at the marginal slab you select (with 4% cess); the regime and with-vs-without sections use the full FY 2025-26 income-tax engine. Tax rules change and individual situations differ — treat these figures as a planning estimate, not tax advice.
How the HRA exemption is calculated
Exempt = min( HRA, Rent − 10% × Basic, City% × Basic )
- HRA
- actual HRA received (monthly)
- Rent
- rent you actually pay (monthly)
- Basic
- basic salary + DA where it counts toward benefits
- City%
- 50% of basic for the four metros, 40% otherwise
Worked example
With your inputs — ₹20,000/mo HRA on ₹40,000 basic with ₹18,000 rent in a metro city — the three figures are ₹20,000 (actual HRA), ₹14,000 (rent − 10% of basic = ₹18,000 − ₹4,000) and ₹20,000 (50% of basic). The smallest — from the rent − 10% basic rule — is your exemption: ₹14,000/mo (₹1.68L/yr), leaving ₹6,000/mo of HRA taxable. This exemption applies under the old regime only; the tax it saves is an estimate that depends on your slab.
HRA exemption questions
Your exemption is the least of three figures: the actual HRA you receive, your rent paid minus 10% of basic salary, and 50% of basic for metro cities (40% for non-metro). Whichever is smallest is the amount exempt from tax — the rest of your HRA stays taxable.
Only Delhi, Mumbai, Kolkata and Chennai are treated as metros, allowing the 50%-of-basic limit. Every other city — including Bengaluru, Hyderabad and Pune — uses the 40% limit, regardless of how large or expensive it is.
No. HRA exemption is only available under the old tax regime. If you opt for the new regime, your entire HRA is taxable, so weigh the lost exemption when comparing the two regimes.
You need rent receipts and ideally a rent agreement. If your annual rent exceeds ₹1,00,000, you must also report your landlord's PAN. Paying rent to a relative is allowed but should be a genuine arrangement with actual payments and records.
For the HRA formula, 'basic salary' means basic pay plus dearness allowance (DA) where DA forms part of retirement benefits, plus any commission based on a fixed percentage of turnover. Most other allowances are excluded. Use the figure your payslip labels as basic (and DA, if applicable).
If you pay no rent you get no exemption — the 'rent minus 10% of basic' rule turns negative or zero and becomes the binding (smallest) figure. Very low rent relative to your basic salary similarly caps the exemption, even if your HRA component is large.
The complete guide to HRA exemption
Why HRA is never simply “the HRA you receive”
House Rent Allowance is a common salary component, and a portion of it can be exempt from income tax if you actually pay rent. But the exemption is never simply the HRA in your payslip — it is the least of three figures: your actual HRA, your rent minus 10% of basic salary, and 50% of basic for the four metro cities or 40% everywhere else. This least-of-three rule means a high HRA alone doesn't guarantee a large exemption; your rent and basic salary both pull on the result.
How the three rules interact
On these inputs, the binding rule is the rent − 10% basic figure at ₹14,000 a month, so that is your exemption. Raising a non-binding rule does nothing — only lifting the smallest of the three increases the exempt amount. That is why two people on the same HRA can get very different exemptions: one may be capped by low rent, another by the city limit on their basic salary.
Metro vs non-metro
Only Delhi, Mumbai, Kolkata and Chennai are treated as metros, where the city rule allows 50% of basic. Every other city — Bengaluru, Hyderabad, Pune and the rest — uses 40%, no matter how large or expensive it is. When the city rule is the binding one, that 10-point gap directly changes your exemption; when another rule binds, the metro flag makes no difference at all.
Old regime only — and the tax it saves
HRA exemption is available only under the old tax regime, so it matters most when you are choosing between the two regimes. The tax it saves depends on your marginal slab: an exemption of ₹1.68 L a year at a 20% slab (plus 4% cess) is worth roughly ₹34,944. That saving is exactly what you forgo if you switch to the new regime, so weigh it against the new regime's lower slab rates.
Documents and how to use this estimate
To claim HRA you'll need rent receipts and ideally a rent agreement; once annual rent crosses ₹1,00,000 you must also report your landlord's PAN. Paying rent to a relative is allowed but should be a genuine arrangement with actual payments. Treat the figure here as a planning estimate — “basic” includes dearness allowance where applicable, your actual exemption depends on the months for which each input held true, and tax rules can change. This is an estimate, not tax advice.