House Rent Allowance (HRA) Calculator
House Rent Allowance (HRA) is one of the most critical components of a salary structure in India, designed to help employees cover the cost of rented accommodation. For salaried individuals, HRA acts as a powerful tax-saving tool under the Old Tax Regime. However, calculating the exact exemption can be tricky due to the multiple conditions involved.
Our HRA Calculator for 2026 simplifies this process. By entering your basic salary, HRA received, and actual rent paid, you can instantly determine how much of your specific allowance is tax-free and how much will be added to your taxable income.
How Does HRA Calculation Work?
The Income Tax Department of India prescribes a specific method to calculate HRA exemption under Section 10(13A). The exemption amount is the lowest of the following three figures:
- Actual HRA Received: The total HRA amount provided by your employer.
- Rent Paid - 10% of Salary: The rent you actually pay minus 10% of your Basic Salary + Dearness Allowance (DA).
- 50% or 40% of Salary:
- 50% if you live in a Metro city (Delhi, Mumbai, Kolkata, or Chennai).
- 40% if you live in any other non-metro city (e.g., Bangalore, Hyderabad, Pune).
The "Salary" for this calculation includes Basic Salary, Dearness Allowance (if it forms part of retirement benefits), and commission based on fixed percentage of turnover.
Formula Used
The mathematical logic used in this calculator is:
Exemption = Min(
Actual_HRA,
Rent_Paid - (0.10 × Salary),
Is_Metro ? (0.50 × Salary) : (0.40 × Salary)
)
Example: If you earn ₹50,000 basic, receive ₹20,000 HRA, and live in Mumbai paying ₹15,000
rent:
1. Actual HRA = ₹20,000
2. Rent - 10% Basic = 15,000 - 5,000 = ₹10,000
3. 50% Basic = ₹25,000
Exemption = ₹10,000 (Lowest)
HRA Rules for FY 2025-26
As per the budget updates feasible for Assessment Year 2026-27, it is crucial to remember that HRA Exemption is NOT available under the New Tax Regime. If you opt for the New Regime under Section 115BAC to avail lower tax rates, your entire HRA component becomes taxable. To claim HRA benefits, you must stick to the Old Tax Regime.
Frequently Asked Questions (FAQs)
Which cities are considered Metro for HRA deduction?
Only the four major metropolitan cities defined by the Constitution of India—Delhi, Mumbai, Kolkata, and Chennai—qualify for the 50% HRA exemption limit. All other cities, including major IT hubs like Bangalore, Hyderabad, Pune, and Gurgaon, are classified as non-metro, where the limit is 40%.
Can I pay rent to my parents to claim HRA?
Yes, paying rent to your parents is a legitimate way to claim HRA exemption. However, you
must ensure:
1. You have a valid rental agreement with them.
2. You actually transfer the rent money (bank proofs are best).
3. Your parents report this rent as "Income from House Property" in their tax returns.
Is HRA exemption part of Section 80C?
No, HRA exemption falls under Section 10(13A) of the Income Tax Act. It is separate from the ₹1.5 Lakh limit of Section 80C.
What if I don't receive HRA but pay rent?
If your salary structure doesn't actally include HRA, or if you are self-employed, you can claim tax deduction for rent paid under Section 80GG. The maximum deduction allowed under this section is ₹5,000 per month (₹60,000 annually), provided you meet other conditions.
Can I claim HRA if I own a house?
You cannot claim HRA if you live in a house you own. However, if you own a house in a different city (or even the same city) but live in a rented property due to employment reasons, you can claim HRA for the rented house and also claim home loan tax benefits for your owned property.