HRA Exemption & 80GG Calculator
Calculate your tax-exempt House Rent Allowance (HRA) instantly. Compare metro vs. non-metro savings and maximize your tax deductions under the Old Tax Regime or Section 80GG.
Do you receive HRA from your employer?
1Your Details
Basic assumed at 50% of salary. HRA assumed at 25% of salary.
Metro: Delhi, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Pune, Ahmedabad
2Your Result
EXEMPT HRA
Rs. 2,40,000
HOW THE EXEMPTION IS CALCULATED
The lowest of the three values above is your exempt amount.
Is your HRA setup tax-optimal?
Get your wealth check-up todayHow to Use the HRA Calculator
The HRA exemption calculator on this page is built to be self-explanatory, but here is the recommended workflow:
Choose the calculator mode
Toggle between 'Yes- I receive HRA' (Section 10(13A) flow) and 'No- claim 80GG instead' (Section 80GG flow). The HRA claim calculator path is the most common for salaried employees; 80GG is for self-employed, pensioners, and salaried employees whose CTC doesn't include HRA.
Enter your annual salary (gross)
Your gross annual CTC. The calculator auto-assumes Basic = 50% of salary and HRA = 25% of salary (industry-standard composition). If your actual salary structure differs significantly, plug into a custom version of the formula in the Excel template attached to this page.
Enter Dearness Allowance (DA)
DA is typically zero for private-sector employees. Government and PSU employees should enter the annual DA amount — it counts towards Component 2 (50%/40% of Basic + DA) and Component 3 (rent − 10% of Basic + DA).
Enter total annual rent paid
The sum of all rent paid during the financial year. For partial-year rentals (mid-year moves, partial occupancy), use the actual amount paid.
Select Metro or Non-Metro
Metros are Delhi, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Pune, and Ahmedabad. Every other city is non-metro. This determines whether Component 2 uses 50% or 40% of Basic + DA.
Read the output
The HRA calculator monthly and annual outputs show your exempt HRA (lowest of three), the breakdown of all three components, and the residual HRA chargeable to tax. Use this to plan your tax declarations and Form 12BB filings with HR.
What is HRA (House Rent Allowance)?
HRA full form is House Rent Allowance — a fixed component of your salary that an employer pays specifically to help cover your rented accommodation expenses. In Hindi salary slips, the HRA ka full form (हाउस रेंट अलाउंस) appears either as a separate line item or rolled into your CTC. The HRA full form in salary documents is uniformly 'House Rent Allowance'.
HRA is an allowance, not an exemption by itself. The HRA allowance gets added to your salary as income — and a portion of it qualifies for tax exemption under Section 10(13A) of the Income Tax Act, but only if you actually pay rent for residential accommodation. If you live in your own house, in your parents' house without paying rent, or in employer-provided accommodation, the HRA you receive is fully taxable.
HRA meaning matters because it determines which portion of your CTC is take-home and which is tax-shielded. The HRA house rent allowance is one of the four major salary-structure exemptions in India (alongside LTA, standard deduction, and Section 80C investments). For salaried renters in metro cities, optimising the HRA setup typically saves ₹60,000 to ₹1.5 lakh per year in income tax; which is why this HRA computation matters even more than most people realise.
How is HRA Exemption Calculated? Section 10(13A) Rule
HRA tax calculation under Section 10(13A) of the Income Tax Act follows a single rule: the exempt HRA is the lowest of three values. This is the HRA exemption rule, the HRA tax exemption section formula, and the HRA calculation rules; all the same thing, just different names used across salary documents and tax sites.
The Three-Component HRA Calculation Formula
HRA calculation in salary uses these three values:
Component 1: Actual HRA received from employer during the year.
Component 2: 50% of (Basic salary + DA) if you live in a metro city — Delhi, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Pune, or Ahmedabad. 40% if you live in any other (non-metro) city.
Component 3: Actual rent paid during the year minus 10% of (Basic salary + DA).
The HRA exemption limit equals the smallest of these three values. The remainder of your HRA; actual HRA received minus the exempt amount, gets added to your taxable salary and taxed at your slab rate. This is what the HRA section in income tax does; it caps the exemption to what's reasonable given your basic salary and rent paid, preventing employers from inflating HRA to avoid tax.
The HRA in income tax framework lives under Section 10(13A) read with Rule 2A of the Income Tax Rules. Both the Section and the Rule are unchanged for FY 2025-26 (AY 2026-27). The HRA section in ITR is reflected in Form 16 Part B and reported in ITR-1/ITR-2 under 'Allowances exempt under Section 10'.
HRA Calculation: A Worked Example
Suppose you earn ₹12,00,000 gross annual salary in Bengaluru (a metro city). Basic is set at 50% (₹6,00,000), HRA at 25% (₹3,00,000), and DA is nil. You pay ₹3,00,000 annual rent (₹25,000 per month). Plug into the three components:
Component 1: Actual HRA received: ₹3,00,000
Component 2: 50% of (Basic + DA) = 50% × ₹6,00,000 = ₹3,00,000
Component 3: Rent minus 10% of (Basic + DA) = ₹3,00,000 − 10% × ₹6,00,000 = ₹3,00,000 − ₹60,000 = ₹2,40,000
Exempt HRA = lowest of three = ₹2,40,000
HRA chargeable to tax = ₹3,00,000 − ₹2,40,000 = ₹60,000
At a 30% slab, that ₹60,000 taxable residual costs you ₹18,720 in tax (including 4% cess). The other ₹2,40,000 is fully exempt and saves you ₹74,880 in tax compared to receiving no HRA exemption.
All examples use FY 2025-26 (AY 2026-27) rules. Section 10(13A) and Rule 2A of the Income Tax Rules remain unchanged from prior years.
HRA Exemption: Metro vs Non-Metro Cities
The HRA percentage applied in Component 2 of the formula depends on whether your city of residence is classified as a metro or non-metro for tax purposes. The HRA city wise classification is fixed by the Income Tax Act and is narrower than the colloquial use of 'metro' city. The HRA classification of cities for tax purposes recognises only four cities as metros under the strict legal interpretation, but practical Indian tax filing treats eight cities as metros for HRA; and this is also what the Income Tax Department's calculator uses.
| City Tier | HRA % of Basic+DA | Cities Included |
| Metro | 50% | Delhi, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Pune, Ahmedabad |
| Non-Metro | 40% | Every Tier 2 and Tier 3 city in India; Jaipur, Indore, Lucknow, Chandigarh, Kochi, Coimbatore, and all other cities. |
The HRA rates difference between metro (50%) and non-metro (40%) directly affects your exemption ceiling. For a ₹6,00,000 basic salary, the metro HRA slab caps Component 2 at ₹3,00,000 while non-metro caps it at ₹2,40,000; a ₹60,000 difference in maximum exemption. Two people with identical salaries and identical rents can have very different HRA tax outcomes based purely on which city they live in.
If you split your year across cities (mid-year transfer, work-from-different-city setups), the HRA exemption is calculated separately for each period using the relevant metro/non-metro rate. Most employers handle this automatically through HR systems, but it's worth verifying when you receive your Form 16.
Is Your HRA Setup Tax-Optimal?
Most salaried employees treat HRA as a fixed line item on their offer letter. It isn't. The HRA portion of your salary structure can usually be negotiated with HR at the time of joining or appraisal and an HRA percentage closer to your actual rent paid maximises your Section 10(13A) exemption.
Get a tax-optimisation review of your salary structure on the Novelty Wealth app. NovaAI looks at your CTC composition, rent paid, and city and tells you whether your HRA setup is leaving exemption on the table, plus the full picture across Section 80C, 80D, NPS, and LTA. Built by a SEBI Registered Investment Advisor team, not by an HR vendor selling tax-saving products.
HRA Exemption in the Old vs New Tax Regime
From FY 2023-24 onwards, India's new tax regime under Section 115BAC became the default for salaried taxpayers. The HRA exemption in new tax regime versus the HRA exemption in old tax regime is one of the most material differences between the two and a key input in any regime-switch decision.
| Feature | Old Tax Regime | Old Tax Regime |
| HRA exemption | Available under Section 10(13A): Full three-component formula | NOT available: full HRA is taxable as part of salary |
| Slab rates | 5% / 20% / 30% | Lower (5% / 10% / 15% / 20% / 30%) |
| Section 80C / 80D / NPS | Available | NOT available (most deductions removed) |
| Best for | Renters in metro cities with substantial HRA and other deductions | Non-renters or those with low deductions |
Is HRA allowed in new regime? No
Is HRA taxable in new regime? Yes
The full HRA you receive is added to taxable salary without any Section 10(13A) carve-out. This is the single biggest reason metro-city renters in the 30% slab typically stay on the old regime; losing the HRA exemption can cost ₹60,000 to ₹1.5 lakh per year in tax, which more than offsets the new regime's lower slab rates for high earners.
The decision is mechanical. Add up your HRA exemption + 80C + 80D + NPS + standard deduction under the old regime. If the total exceeds approximately ₹3.75 lakh, the old regime usually wins. If it's lower, the new regime usually wins. The HRA tax exemption section alone often gets you halfway to the breakeven.
Section 80GG: The HRA Alternative for Non-Salaried
If you don't receive HRA because you're self-employed, your salary structure doesn't include it, or you're a pensioner who pays rent; Section 80GG gives you a parallel deduction for rent paid. The 80GG deduction is the HRA-equivalent for taxpayers who can't claim Section 10(13A).
Are You Eligible to Claim Deduction Under Section 80GG?
Three conditions must all be true:
- You don't receive HRA at any point during the year (no HRA in your salary, no rent-free accommodation from employer).
- You actually pay rent for residential accommodation.
- Neither you, your spouse, nor your minor child owns residential property in the city where you live, work, or carry out business.
80GG Deduction Limit: Lowest of Three
Like Section 10(13A), the 80GG deduction is also the lowest of three values:
Component 1: ₹5,000 per month (₹60,000 per year). This is the absolute 80GG deduction limit.
Component 2: 25% of total income (after standard deduction and other Chapter VI-A deductions, excluding 80GG itself).
Component 3: Actual rent paid minus 10% of total income.
Deduction u/s 80GG is significantly more restrictive than Section 10(13A); the ₹5,000/month cap means the maximum annual benefit is ₹60,000, regardless of how much rent you actually pay. For high-rent metro renters who don't receive HRA, this is often inadequate but better than nothing.
Deduction under section 80GG is claimed by filing Form 10BA with your tax return, declaring that you meet the three eligibility conditions and listing the landlord's name, address, and PAN (if rent exceeds ₹1,00,000 per year).
Critically, 80GG is available only under the old tax regime. The deduction under sec 80GG, like Section 10(13A) HRA, is removed entirely under the new regime.
HRA for Central Government Employees (7th Pay Commission)
HRA for central govt employees follows a separate schedule under the 7th Central Pay Commission (7th CPC). The 7th pay commission HRA classifies cities into X, Y, and Z categories; narrower than the income tax metro/non-metro split and pays HRA as a fixed percentage of basic pay.
| City Class | HRA % of Basic | Floor (Minimum) | Cities Included (illustrative) |
| X (Population 50L+) | 27% (raised to 30% when DA ≥ 50%) | ₹5,400/m | Delhi, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Ahmedabad, Pune |
| Y (5L–50L) | 18% (raised to 20% when DA ≥ 50%) | ₹3,600/m | Most Tier 2 cities; Jaipur, Lucknow, Indore, Bhopal, Coimbatore, etc. |
| Z (Below 5L) | 9% (raised to 10% when DA ≥ 50%) | ₹1,800/m | All remaining cities and rural postings |
The HRA 7th pay commission rates auto-revise when Dearness Allowance (DA) crosses 25% and 50% milestones. The 7th pay commission HRA table pdf published by the Department of Personnel and Training (DoPT) is the authoritative source. The HRA central government rate for X-class cities is currently 30% as DA crossed the 50% threshold in 2024.
The HRA calculation 7th pay commission method is much simpler than the private-sector Section 10(13A) formula: HRA payable = basic pay × applicable rate (subject to floor). It's a payable rate, not an exemption rate; central government employees still need to apply the standard Section 10(13A) three-component formula on top to determine the tax-exempt portion of the HRA they receive.
Central govt HRA rate revisions and the HRA rules for central government employees pdf are uploaded annually to dopt.gov.in. The HRA of central government employees is also extended to state government employees in many states, with rates aligned to the central rates plus or minus minor state-specific adjustments.
Documents Needed to Claim HRA: Forms and Rent Receipts
Claiming HRA exemption requires documentary proof submitted to your employer (typically once a year for Form 16) or directly to the Income Tax Department (when filing ITR). How to claim HRA in ITR follows the same documentation chain the only difference is timing.
HRA Declaration Form and Rent Receipts
The HRA declaration form is an internal employer document where you declare your annual rent, landlord details, and accommodation type. Most companies issue an HRA form pdf at the start of each financial year fill it out, attach rent receipts and landlord PAN (if applicable), and submit to HR. Many state governments and PSUs publish their own HRA application format for instance, the HRA form Rajasthan template is used by state government employees, and most public-sector banks have their own HRA form pdf download links on their employee portals.
The HRA rent receipt is the most commonly demanded document. A valid HRA rent receipt should include: tenant name, landlord name, monthly rent amount, period covered, full rented address, landlord signature, and revenue stamp (₹1 stamp affixed) for rent over ₹5,000 per month. Without rent receipts, HRA claims can be disallowed during assessment.
Form 12BB and Landlord PAN
Form 12BB is the standard CBDT-prescribed form for declaring all tax-saving investments and exemptions to your employer HRA is one of the line items. The HRA section in income tax return (Schedule S of ITR-1/ITR-2) carries over the values your employer reported in Form 16 Part B.
If your annual rent paid exceeds ₹1,00,000 (₹8,333 per month), you must furnish your landlord's PAN to claim the HRA exemption. If the landlord doesn't have a PAN, you need a written declaration from the landlord stating they don't have one and giving Form 60 instead. This requirement is from CBDT Circular 8/2013 and remains in force.
HRA Claim Rules: Common Conditions
HRA conditions and HRA claim rules that catch most people out:
- Rent paid to parents qualifies for HRA exemption; but the parents must declare the rent as income in their own ITR. Bank transfer (not cash) is strongly recommended for audit trail.
- Rent paid to spouse does NOT qualify for HRA exemption. This is a long-standing Income Tax Department position upheld by multiple tribunal rulings.
- Self-occupied property in the same city as your workplace usually disqualifies HRA claim; the IT department will challenge it during scrutiny.
- Maximum HRA exemption (max HRA exemption) has no absolute cap; it's purely the lowest-of-three formula. A high-rent, high-basic salary structure can produce ₹3 lakh+ in HRA exemption legitimately.
- How much HRA can be claimed depends entirely on your actual rent paid and salary structure; there's no government-set absolute limit other than the formula.
Key Things to Know About HRA
| Details | What You Need to Know |
| Section reference | HRA exemption falls under Section 10(13A) of the Income Tax Act, read with Rule 2A of the Income Tax Rules. The HRA comes under which section question has one answer: Section 10(13A). |
| Tax regime applicability | HRA exemption is available only under the old tax regime. The new regime (Section 115BAC) removes all HRA exemption. |
| Calculation basis | Lowest of three values: actual HRA received, 50%/40% of Basic+DA, and rent paid minus 10% of Basic+DA. There is no separate HRA slab or HRA limit set by the government; it's a formula-based exemption. |
| Landlord PAN | Mandatory for rent above ₹1 lakh/year. Without it, the deduction can be disallowed. |
| Documents | Rent agreement, monthly rent receipts (revenue stamp above ₹5,000/m), and landlord PAN. Form 12BB to employer; Schedule S in ITR. |
| Rent to family | Rent to parents is allowed if they declare it as income. Rent to spouse is not allowed. |
| Gratuity calculation | HRA is NOT included in the basic-pay-based gratuity calculation. Gratuity uses Basic + DA only. |
| 80GG alternative | If you don't receive HRA, Section 80GG provides a parallel deduction capped at ₹60,000 per year. Both can't be claimed together. |
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Ready to Optimise Your Tax Setup?
Don't just calculate your HRA; optimise your entire tax strategy. Use NovaAI on the Novelty Wealth app to perfectly align your salary structure, regime choice, and deductions for maximum tax savings.
Get Your Wealth Check-Up on NovaAIHRA Exemption and 80GG Calculator
Use the HRA Calculator to figure out exactly how much of your House Rent Allowance is tax-exempt under Section 10(13A) and how much remains taxable in your salary. If you don't receive HRA at all, switch the toggle to claim a Section 80GG deduction instead. Enter your gross salary (basic is auto-set at 50%, HRA at 25%), annual DA, total rent paid, and metro/non-metro selection; the calculator instantly shows you the lowest-of-three exemption value and the residual HRA that becomes taxable income.
This HRA exemption calculator is also known as the HRA tax exemption calculator, HRA tax calculation calculator, HRA rebate calculation tool, HRA claim calculator, HRA calculator online, HRA calculator monthly, HRA calculator income tax department style, HRA exemption calculator income tax website style, HRA calculator ITR, HRA computation tool, or simply HRA calculation calculator. Whichever name you searched for, the math under Section 10(13A) is identical; the lowest of three values (actual HRA received, 50%/40% of basic+DA, rent minus 10% of basic+DA) is your exempt amount.
Frequently Asked Questions
HRA full form is House Rent Allowance; a component of salary paid by employers to help cover an employee's rented accommodation costs. In Hindi, the HRA ka full form is "हाउस रेंट अलाउंस". The HRA full form in salary slips and Form 16 documents is uniformly 'House Rent Allowance'. There's no abbreviation expansion that differs: every Indian employer, government department, and the Income Tax Department uses the same term.
HRA meaning is straightforward: it's an allowance paid by your employer specifically to help cover the cost of renting a home. The HRA you receive is taxable income by default; but Section 10(13A) of the Income Tax Act allows a partial exemption equal to the lowest of three values: actual HRA received, 50% (metro) or 40% (non-metro) of basic+DA, and rent paid minus 10% of basic+DA. If you pay rent, this exemption typically saves ₹60,000–₹1.5 lakh per year for metro-city renters.
Yes, HRA is technically taxable income; it's part of your salary. However, under Section 10(13A) (the HRA tax exemption section), a portion is exempt from tax if you actually pay rent. The exempt portion is the lowest of the three components in the formula. The residual (HRA received minus exempt amount) is added to your taxable salary and taxed at your slab rate. Under the new tax regime, the entire HRA is taxable with no exemption.
No. HRA exemption under Section 10(13A) is not available under the new tax regime (Section 115BAC) the full HRA you receive becomes taxable. This is one of the main reasons metro-city renters in the 30% slab usually stay on the old regime; losing the HRA exemption typically costs more than the new regime's lower slabs save. Section 80GG is also unavailable under the new regime.
The HRA exemption limit (also called the HRA tax exemption limit) has no absolute ceiling; it's defined by the lowest-of-three formula. The maximum theoretical exemption can be very large if your basic salary, HRA, and rent are all high. Practically, the binding constraint is usually Component 3 (rent minus 10% of basic+DA) for renters whose HRA exceeds 50% of basic. There is no separate HRA slab or ceiling beyond the formula.
For a ₹12 lakh annual salary in a metro city with standard composition (Basic = 50% = ₹6 lakh, HRA = 25% = ₹3 lakh), DA = 0, and ₹3 lakh annual rent: Component 1 = ₹3,00,000 (actual HRA). Component 2 = 50% × ₹6,00,000 = ₹3,00,000. Component 3 = ₹3,00,000 − 10% × ₹6,00,000 = ₹2,40,000. Exempt HRA = lowest = ₹2,40,000. HRA taxable = ₹60,000. This is the standard HRA calculation in salary for a metro tech employee at this CTC level.
Set up five input cells: Basic (B1), DA (B2), HRA received (B3), Rent paid (B4), Metro flag (B5: 1 for metro, 0 for non-metro). Then the entire HRA calculation formula is: =MIN(B3, IF(B5=1, (B1+B2)*0.5, (B1+B2)*0.4), B4-(B1+B2)*0.1). One line gives you the exempt amount. Wrap it in =MAX(0, ...) to handle the edge case where rent is less than 10% of basic+DA. The Excel template attached to this page has both the compact and walkthrough versions.
Three conditions must all be true:
(1) you don't receive HRA at any point during the year
(2) you actually pay rent for residential accommodation
(3) neither you, your spouse, nor your minor child owns residential property in the city where you live, work, or carry out business.
If all three apply, you can claim Section 80GG deduction up to ₹60,000 per year. The deduction u/s 80GG is claimed by filing Form 10BA.
The 80GG deduction limit is the lowest of three values: ₹5,000 per month (₹60,000 per year hard cap), 25% of total income, and rent paid minus 10% of total income. The ₹60,000 annual cap is the absolute ceiling; even if rent paid is very high, you can't claim more than ₹60,000 under Section 80GG. This is materially less generous than the Section 10(13A) HRA exemption available to salaried employees who receive HRA.
HRA for central govt employees under the 7th pay commission is paid at 30% (X-class cities), 20% (Y-class), or 10% (Z-class) of basic pay; these rates apply when DA is 50% or higher (which is the current position from 2024 onwards). The HRA rules for central govt employees pdf published by DoPT lists the city classifications and floor amounts. Tax exemption on the HRA received is still calculated using the standard Section 10(13A) three-component formula on top of these payable rates.
Yes, HRA exemption can be claimed on rent paid to parents; but two conditions must be met. (1) Your parents must declare the rental income in their own ITR under 'Income from House Property'. (2) The rent should be paid via bank transfer (not cash) to maintain a verifiable audit trail. If your parents are in a lower tax slab, this is a legitimate family tax-planning strategy. Rent paid to a spouse is not allowed.
The HRA section in ITR-1 is Schedule S (Salary), under 'Allowances exempt under Section 10'. Your employer typically pre-fills this in Form 16 Part B; the values then flow into ITR-1 or ITR-2 automatically when you file. If you're claiming an HRA exemption higher than what your employer has shown in Form 16 (because you submitted documents late, or your employer didn't process the declaration), you can claim the differential directly in the ITR. The HRA rebate in income tax is reflected here.
No. HRA is not included in the gratuity calculation. Gratuity under the Payment of Gratuity Act is computed as: (Basic + DA) × 15/26 × years of service. HRA, special allowances, bonus, and overtime are all excluded. This is a frequent source of confusion employees often assume HRA matters for retirement benefits, but it doesn't. The same exclusion applies to leave encashment, pension contributions, and PF (which uses Basic + DA only).
HRA in the salary context is House Rent Allowance; an income tax exemption under Section 10(13A). The same three-letter abbreviation appears in other domains: HRA in medical means Health Risk Assessment (a clinical screening), and HRA in HR management can mean Human Resource Accounting (a managerial discipline). This calculator and page are exclusively about the salary tax exemption form of HRA.
No. HRA exemption requires you to actually pay rent for residential accommodation. If you work from home and live in property you own, no rent is being paid, so no exemption applies; the full HRA received is taxable. If you work from home but rent the accommodation you live in (different building, parents' property with formal rent, etc.), the standard Section 10(13A) exemption applies. The work-from-home arrangement itself doesn't change HRA tax treatment.