HRA Exemption Calculator

How HRA exemption is computed

Section 10(13A) of the Income Tax Act, read with Rule 2A, exempts from tax the LEAST of three amounts. Whichever of the three numbers is the smallest becomes your exemption — the rest of the HRA is taxable as salary.

1. Actual HRA received — the full HRA component on your salary slip / Form 16.
2. 50% of basic salary if you live in a metro city (Delhi, Mumbai, Kolkata, Chennai) or 40% of basic salary if you live anywhere else — including Ahmedabad.
3. Rent paid minus 10% of basic salary — your contribution to rent that exceeds 10% of your basic.

When HRA exemption is NOT available

• You are filing under the new tax regime (Section 115BAC). HRA exemption is one of the deductions removed in the new regime — the higher standard deduction is the trade-off.
• You live in your own house — no rent paid, no exemption.
• You stay rent-free with parents and pay them no rent. Rent receipts to family must be backed by actual transfers.
• You receive HRA but live in employer-provided accommodation (no rent expense).

Documentation you must keep

• Monthly rent receipts signed by the landlord.
• Rent agreement on stamp paper.
• Landlord's PAN — mandatory if annual rent exceeds ₹1 lakh. Without PAN, the landlord must give a declaration in Form 60.
• Proof of payment — bank transfers strongly preferred over cash.
• If you pay rent to a family member (parents / spouse / sibling), maintain genuine bank transfers and a rent agreement — the tax department scrutinises these closely.

Common HRA mistakes that trigger notices

• Claiming HRA when you also claim home loan interest (Section 24) on a self-occupied house. Both can be claimed only if you live in one city and own a property in another — and the property is let out or treated as deemed let-out.
• Rent paid to a non-existent landlord — TDS departments cross-check PAN data.
• Inflated rent claimed without bank transfer trail.
• Claiming under the new regime — automatic denial.
• Failure to deduct TDS at 5% under Section 194-IB when annual rent exceeds ₹50,000 per month and you are not under tax audit.