Salary-Calculator.in

HRA calculator

Work out your house rent allowance by pay and city class, and the part exempt from tax under Section 10(13A) with the least-of-three rule. For FY 2026-27.

Updated 20 August 2026

This calculator works out your house rent allowance and how much of it is tax-free. HRA is a percentage of your basic pay set by your city class, 30, 20, or 10% for X, Y, and Z cities, and part of it is exempt from income tax under Section 10(13A) as the least of three prescribed amounts. Enter your basic pay, dearness allowance, city class, whether you live in a metro, and your rent; the calculator returns the HRA you receive, the exempt part, and the taxable part. The exemption applies under the old tax regime; the income tax calculator then shows which regime is better for you.

Calculator

Basic pay in your pay-matrix level.
60% from 1 January 2026. Used for the exemption, not the HRA amount.
Sets the HRA rate. See city classification.
The rent you actually pay. Nil rent means nil exemption.
Delhi, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Pune or Ahmedabad, listed by Rule 279 of the Income-tax Rules, 2026 from 1 April 2026. Everywhere else takes 40%. On the financial year 2025-26 return, only the first four take 50%.

HRA and its exemption (per month)

The exemption is available only under the old tax regime. Under the new regime the whole HRA is taxable. Dearness allowance is added to basic pay only to work out the exemption, not the HRA itself.

Exempt against taxable

How your monthly HRA splits between the tax-exempt part, in green, and the taxable part, in orange.

How the HRA amount is set

Your house rent allowance is a fixed percentage of your basic pay, decided by the class of your city. The rates, under the Department of Expenditure Office Memorandum of 7 July 2017, are 30% for X-class cities, 20% for Y-class, and 10% for Z-class, subject to a minimum of Rs. 5,400, Rs. 3,600, and Rs. 1,800 a month respectively, so that a low basic pay does not produce a negligible allowance. The house rent allowance article lists the cities in each class, and the city classification for HRA reference explains how a city is graded by population.

The rates rise with dearness allowance. When the 7th CPC set them, they were 24%, 16%, and 8%, to become 27%, 18%, and 9% once dearness allowance crossed 25%, and 30%, 20%, and 10% once it crossed 50%. Dearness allowance reached 50% on 1 January 2024, so the rates are now at their top step of 30%, 20%, and 10%. Note that the dearness allowance is not added to the HRA amount; the HRA is a percentage of basic pay alone.

How much HRA is exempt from tax

The tax exemption is where most of the confusion lies. Under Section 10(13A) of the Income-tax Act, the exempt HRA is the least of three amounts:

  • a. The actual HRA received.
  • b. 50% of salary if the rented home is in a listed city, or 40% if it is not, where salary is basic pay plus dearness allowance.
  • c. The rent you pay, minus 10% of salary.

The calculator computes all three and takes the lowest. Because of amount (c), if you pay little or no rent, the exemption shrinks to little or nothing, regardless of how much HRA you receive. And because of amount (a), the exemption can never exceed the HRA you actually get.

The tax city list and the pay city class

Eight cities take the 50% factor in amount (b) for income earned from 1 April 2026: Delhi, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Pune and Ahmedabad. Rule 279 of the Income-tax Rules, 2026, notified on 20 March 2026 by Notification No. 22/2026, G.S.R. 198(E), prescribes them for the exemption at serial number 11 of the table in Schedule III to the Income-tax Act 2025. They are the same eight cities that are class X for paying the allowance.

That coincidence is recent, and treating the two as one rule is still the most common error here. Until 31 March 2026 the 50% factor reached only Delhi, Mumbai, Kolkata and Chennai, under Rule 2A of the Income-tax Rules, 1962, so an employee in Bengaluru drew the allowance at 30% of basic pay and computed the exemption at 40% of salary. That split still governs the financial year 2025-26 return, filed during 2026: untick the box for a Bengaluru, Hyderabad, Pune or Ahmedabad address on that return. The calculator keeps the two settings apart, the city-class dropdown for the rate and the tick box for the tax factor, because either list can be amended without the other.

A worked example

Take an employee with a basic pay of Rs. 50,000 in Mumbai, a class X city, with dearness allowance at 60% and a rent of Rs. 20,000 a month. The HRA received is 30% of Rs. 50,000, which is Rs. 15,000 a month. Salary for the exemption is basic plus dearness allowance, Rs. 50,000 plus Rs. 30,000, which is Rs. 80,000.

The three amounts are: (a) the actual HRA, Rs. 15,000; (b) 50% of Rs. 80,000, which is Rs. 40,000, because Mumbai is a listed city; and (c) the rent of Rs. 20,000 minus 10% of Rs. 80,000, which is Rs. 20,000 minus Rs. 8,000, or Rs. 12,000. The least of the three is Rs. 12,000, so Rs. 12,000 of the HRA is exempt and the remaining Rs. 3,000 a month is taxable. If the same employee paid Rs. 30,000 rent, amount (c) would rise to Rs. 22,000, above the actual HRA of Rs. 15,000, so the whole HRA would be exempt.

Using the result

The exempt HRA reduces your taxable income under the old regime only; under the new regime the whole HRA is taxable. So the HRA exemption is one of the deductions that can tip the old regime against the new in your favour: enter the exempt figure from this calculator into the income tax calculator’s HRA field to compare the two regimes. The figure here is a guide based on the standard rule; your employer computes the final exemption on your Form 16 from your declared rent.

Frequently Asked Questions (FAQs)

How is HRA calculated for a central government employee?
House rent allowance is a percentage of your basic pay by city class: 30% for X-class cities, 20% for Y, and 10% for Z, subject to a minimum floor of Rs. 5,400, Rs. 3,600, and Rs. 1,800 respectively. Dearness allowance is not added to the HRA amount; it is only used, together with basic pay, to work out the tax-exempt part.
How much HRA is exempt from income tax?
Under Section 10(13A), the exempt HRA is the least of three amounts: the actual HRA you receive; 50% of your salary (basic plus dearness allowance) if you live in one of the eight listed cities, or 40% if you do not; and the rent you pay minus 10% of your salary. The calculator computes all three and takes the lowest. The exemption is available only under the old tax regime.
Which cities get the 50% factor for the HRA tax exemption?
Eight, for income earned from 1 April 2026: Delhi, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Pune and Ahmedabad. Rule 279 of the Income-tax Rules, 2026, notified on 20 March 2026 by Notification No. 22/2026, G.S.R. 198(E), added the last four, so the tax list now matches the eight class X cities that draw the allowance at 30% of basic pay. Every other city takes 40%. On the financial year 2025-26 return only the first four take 50%, under Rule 2A of the Income-tax Rules, 1962.
Is HRA fully exempt from tax?
Only if the least of the three amounts equals your whole HRA, which usually happens when your rent is high relative to your salary. If your rent is low, or you pay no rent, the exempt part is smaller or nil and the rest of the HRA is taxable. HRA is fully taxable if you do not pay rent.
Does HRA exemption apply under the new tax regime?
No. The HRA exemption under Section 10(13A) is available only under the old regime. Under the new regime the HRA is fully taxable, which is one of the deductions you give up in exchange for the new regime’s lower rates and higher rebate. The income tax calculator shows which regime is better once you know your exemptions.

External references

References

  1. Ministry of Finance, Department of Expenditure, OM No. 2/5/2017-E.II(B) dated 7 July 2017, house rent allowance rates and floors under the 7th CPC.
  2. Income-tax Act, 1961, Section 10(13A) and Rule 2A, on the exemption of house rent allowance.
  3. Income-tax Act, 2025, effective 1 April 2026, which carries the exemption at serial number 11 of the table in Schedule III.
  4. Central Board of Direct Taxes Notification No. 22/2026 [F. No. 370142/41/2025-TPL], G.S.R. 198(E), dated 20 March 2026, notifying the Income-tax Rules, 2026 from 1 April 2026; Rule 279 names eight cities for the 50% limb.