HRA Exemption
Calculate the taxable and tax-exempt portion of your House Rent Allowance.
Calculation Summary
For salaried employees living in rented accommodation, House Rent Allowance (HRA) is one of the most significant tax-saving tools. Under Section 10(13A) of the Income Tax Act, a substantial portion of the HRA you receive can be declared tax-free, lowering your overall tax liability.
📐 The Rule of 3 (Calculation Logic)
The Income Tax department calculates the HRA exemption as the LOWEST of the following three amounts:
- Actual HRA Received: The exact amount listed in your salary slip.
- 50% / 40% of Salary: 50% of (Basic + DA) if you live in a Metro city. 40% for Non-Metro cities.
- Rent - 10% of Salary: Actual Rent Paid minus 10% of (Basic + DA).
Metro vs Non-Metro Cities: The Classification
The government defines "Metro" strictly for HRA purposes. Only Delhi, Mumbai, Kolkata, and Chennai qualify for the 50% rule.
Other major tech hubs like Bangalore, Hyderabad, Pune, Gurgaon, and Noida are considered "Non-Metro", meaning you can only claim 40% of your Basic Salary in that calculation step.
Frequently Asked Questions
Is Landlord's PAN mandatory?
Yes, if your annual rent payment exceeds ₹1,00,000 (approx ₹8,333 per month), you must provide your landlord's PAN to your employer to claim the exemption.
Can I claim HRA if I pay rent to parents?
Yes, but you must have a valid rent agreement and proof of payment (bank transfer). Your parents must also declare this rental income in their ITR.