HRA Calculator
Calculate your HRA (House Rent Allowance) exemption for income tax based on your salary, rent paid, and city of residence.
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What is an HRA Calculator?
An HRA (House Rent Allowance) Calculator helps salaried individuals determine the portion of HRA that is exempt from income tax. HRA is a component of salary paid by employers to help employees meet rental expenses. The exemption reduces your taxable income under the old tax regime.
HRA Exemption Formula
HRA Exemption = Minimum of:
1. Actual HRA received
2. Rent paid − 10% of Basic Salary
3. 50% of Basic Salary (Metro) or 40% of Basic Salary (Non-Metro)
1. Actual HRA received
2. Rent paid − 10% of Basic Salary
3. 50% of Basic Salary (Metro) or 40% of Basic Salary (Non-Metro)
Where:
- Metro Cities: Delhi, Mumbai, Kolkata, and Chennai (50% of basic salary)
- Non-Metro Cities: All other cities (40% of basic salary)
- Basic Salary: Includes Dearness Allowance (DA) if part of retirement benefits
Key Points About HRA
- HRA exemption is only available under the old tax regime
- You must actually pay rent to claim HRA exemption
- Rent receipts are required if rent exceeds ₹1 lakh per year
- PAN of landlord is mandatory if annual rent exceeds ₹1 lakh
HRA Calculation Example
If you live in Mumbai (metro city) with the following details:
- Basic Salary: ₹40,000/month
- HRA Received: ₹20,000/month
- Rent Paid: ₹15,000/month
The three conditions (per month):
- Actual HRA received = ₹20,000
- Rent paid − 10% of basic = ₹15,000 − ₹4,000 = ₹11,000
- 50% of basic salary = ₹20,000
HRA Exemption: ₹11,000/month (minimum of the three) = ₹1,32,000/year
Taxable HRA: ₹20,000 − ₹11,000 = ₹9,000/month = ₹1,08,000/year
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Frequently Asked Questions
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HRA exemption is the portion of House Rent Allowance that is not taxable under the Income Tax Act. It is calculated as the minimum of three values: actual HRA received, rent paid minus 10% of basic salary, and 50% (metro) or 40% (non-metro) of basic salary.
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Only four cities are considered metro for HRA exemption purposes: Delhi, Mumbai, Kolkata, and Chennai. All other cities, including Bangalore, Hyderabad, Pune, and Ahmedabad, are classified as non-metro.
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No, you cannot claim HRA exemption if you live in your own house and do not pay rent. However, if you have a home loan and also pay rent in a different city, you can claim both HRA exemption and home loan interest deduction.
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No. HRA exemption is only available under the old tax regime. If you opt for the new tax regime (introduced in Budget 2020), you cannot claim HRA exemption, but you benefit from lower tax slab rates.
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Rent receipts are mandatory if your annual rent exceeds Rs 1 lakh. If the rent exceeds Rs 1 lakh per year, you must also provide the PAN of your landlord. It is advisable to keep rent receipts regardless of the amount.
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Yes, you can pay rent to your parents and claim HRA exemption, provided your parents own the property, you have a formal rental agreement, and you actually transfer the rent amount. Your parents must declare the rental income in their tax return.
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