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HRA calculator

Under the old tax regime, part of your house rent allowance is tax-free: the least of the HRA you get, your rent minus 10% of your salary, and 40% of your salary (50% in a metro). On ₹50,000 a month basic pay with ₹20,000 HRA and ₹18,000 rent, ₹1,56,000 a year is exempt.

For your city, the rules allow
HRA exempt a year
₹1,56,000
HRA taxed a year
₹84,000
HRA received
₹2,40,000
Rent minus 10% of salary
₹1,56,000
40% of salary
₹2,40,000

How it is worked out

The exempt part is the least of three amounts: the HRA you actually receive; the rent you pay minus 10% of your salary; and 50% of your salary in a metro, or 40% elsewhere. "Salary" here means basic pay plus dearness allowance that counts for retirement benefits. Under the 1961 Act's Rule 2A the metros are Delhi, Mumbai, Kolkata and Chennai; the Income-tax Act 2025 and its rules apply from April 2026 and may name more cities, so check the current list before you choose.

Worked example (a year, at 40%): salary ₹6,00,000, HRA ₹2,40,000, rent ₹2,16,000. The three amounts are ₹2,40,000, ₹1,56,000 and ₹2,40,000, so ₹1,56,000 is exempt and ₹84,000 is taxed. At 50% the answer is the same here: the rent limit is the lowest.

The new tax regime, the default since April 2023, gives no HRA exemption. If your rent is over ₹1 lakh a year, your employer will ask for your landlord's PAN.

Rules checked against the Income-tax Act 1961 (section 10(13A), Rule 2A). Which cities count as metros under the 2025 Act's rules is pending a check by Enchanted Spaces.

Questions

How is HRA exemption worked out?
It is the least of the HRA you receive, your rent minus 10% of your salary, and 40% of your salary (50% in a metro). Salary means basic pay plus dearness allowance.
Which cities get the 50% rate?
Under the 1961 Act's Rule 2A, Delhi, Mumbai, Kolkata and Chennai. The Income-tax Act 2025 and its rules apply from April 2026 and may add cities; check the current list before you file.
Can I claim HRA under the new tax regime?
No. The HRA exemption is only available under the old tax regime.

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