HRA exemption calculator

This calculator works out the tax-free part of your house rent allowance under Section 10(13A) of the Income-tax Act, 1961. The exemption is the least of three amounts, and the calculator shows which one binds, the exempt HRA, and the taxable HRA that is left. It applies to a salaried person, including a central government employee, who pays rent and opts for the old tax regime.

Calculator

Which of the three is smallest

What the calculator computes

House rent allowance is part of the salary of most central government employees and other salaried people who rent their home. Section 10(13A) makes part of it tax-free, and the rest is added to taxable income. The tax-free part is not a flat percentage; it is the least of three amounts, so the exemption is capped by whichever of the three is smallest for your figures.

The calculator takes your basic pay, dearness allowance, HRA, and rent, works out the three amounts, and reports the least of them as the exempt HRA. It then shows the taxable HRA that remains and the exempt amount for a full year. Because the exemption depends on the smallest of the three, a higher rent or a metro posting does not always raise it; the binding amount is often the rent leg.

The formula

Salary for this purpose is basic pay plus dearness allowance (for a government employee the full DA counts, because it forms part of pay for retirement benefits). The exemption is:

Exempt HRA = the least of

1. the actual HRA received;
2. the rent paid minus 10% of salary (never less than zero);
3. 50% of salary if the rented home is in a listed city, or 40% of salary otherwise.

The taxable HRA is the HRA received minus the exempt HRA. If the rent does not exceed 10% of salary, the second amount is nil, and so is the exemption.

Eight cities take the 50% leg 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. Until 31 March 2026 the leg reached only the first four, under Rule 2A of the Income-tax Rules, 1962, which is why a Bengaluru or Hyderabad posting took 40% on every earlier return.

The tax list and the pay list are still two rules, even though they now name the same eight cities. The Department of Expenditure classifies cities as X, Y and Z to decide how much house rent allowance is paid, at 30%, 20% and 10% of basic pay under OM No. 2/5/2017-E.II(B) dated 7 July 2017. Either list can be amended without the other.

A worked example

Take a government employee in Delhi with a basic pay of Rs. 50,000, dearness allowance of Rs. 30,000, HRA of Rs. 13,500, and rent of Rs. 20,000 a month, on the old regime. Salary is Rs. 80,000.

The three amounts are: the actual HRA, Rs. 13,500; the rent minus 10% of salary, Rs. 20,000 minus Rs. 8,000, which is Rs. 12,000; and 50% of salary, Rs. 40,000. The least is Rs. 12,000, so Rs. 12,000 of the HRA is tax-free and Rs. 1,500 is taxable. Over a year that is Rs. 1,44,000 exempt.

Had the same person paid only Rs. 5,000 rent, the second amount would be Rs. 5,000 minus Rs. 8,000, which is below zero and so nil, and the whole HRA would be taxable. Under the new regime, the exemption does not apply at all and the full Rs. 13,500 is taxable.

Notes and scope

The HRA exemption is available only under the old tax regime. Under the new regime, the default from assessment year 2024-25, the whole HRA is taxable, and the calculator shows that when you select it. You must actually pay the rent and not own or occupy the house, and if the rent is more than Rs. 1,00,000 in the year you must report the landlord’s PAN to claim the exemption.

The calculator uses monthly figures and multiplies by twelve for the year, which fits the common case of steady pay and rent. If your salary, rent, or city changed during the year, the exemption is worked out separately for each period and added up, so run the calculator once for each period.

You can claim the HRA exemption and the deduction for home-loan interest under Section 24(b) in the same year where the facts support it, for example when you rent the home you live in and own a house that is let out or lies in another city. The two are separate reliefs under separate sections, so one does not cancel the other. What is not allowed is claiming HRA exemption for rent paid to a spouse for a house you occupy together, or claiming rent you do not actually pay; those are the points the tax department tests when it examines an HRA claim.

Related Articles

• HRA exemption under Section 10(13A)
• House rent allowance
• HRA calculator
• Income tax for government employees
• Income tax calculator
• City classification for HRA
• Standard deduction
• Dearness allowance
• Take-home salary of central government employees
• 7th Central Pay Commission
• Pay matrix
• Central government employees in India

External references

• Income Tax Department
• Central Board of Direct Taxes
• Department of Expenditure
• Department of Personnel and Training