Salary & Rent Details
HRA component shown on your salary slip / CTC breakup.
Actual rent you pay your landlord. Must have rent receipts / agreement.
Non-metro (40%): Bengaluru, Hyderabad, Pune, Ahmedabad + all other cities
Common profiles
HRA Exemption (Tax-Free)
per month · ₹2,16,000 per year
HRA Received
₹20,000
Taxable HRA
₹2,000
% of HRA Exempt
90.0%
Annual Tax Saving
₹0
HRA Exemption — 3 Conditions
Exemption = minimum of the three values below (highlighted row is the limiting factor)
① Actual HRA Received
From salary slip
₹20,000
② 50% of Basic (Metro)
50% × basic salary
₹25,000
③ Rent Paid − 10% of Basic
Actual rent − 10% × basic
₹13,000
✓ HRA Exemption (Minimum)
Condition ③ is the limiting factor
₹13,000
HRA Breakdown
Tax-Free HRA
₹18,000
90%
Taxable HRA
₹2,000
10%
What is HRA Exemption?
HRA (House Rent Allowance) is a component of your salary provided by employers to help cover rental expenses. Under Section 10(13A) of the Income Tax Act, a portion of the HRA received is exempt from income tax — reducing your overall tax liability.
The tax-free portion is the minimum of three calculated values. This ensures only genuine rent payments are exempt and prevents over-claiming.
Old regime only
HRA exemption is only available under the old tax regime. Under the new regime (default from FY 2023-24), HRA exemption cannot be claimed.
HRA Exemption Formula
The HRA exemption is the lowest of these three:
① Actual HRA Received
= HRA component from salary slip
② % of Basic Salary
= 50% × Basic (Metro cities)
= 40% × Basic (Non-metro cities)
③ Rent Paid Minus 10% of Basic
= Actual Rent Paid − 10% × Basic
Exemption = MIN(①, ②, ③)
Remaining HRA (received − exempt) is added to taxable income.
HRA Example Calculations
Mumbai employee: Basic ₹50K, HRA ₹20K, Rent ₹18K
Bengaluru employee: Basic ₹80K, HRA ₹32K, Rent ₹30K
Tip: Pay more rent = higher exemption
Increasing rent paid (up to a reasonable limit) raises Condition ③, potentially increasing your exemption — as long as you have genuine rent receipts.
HRA Rules & Important Points
- →Must actually pay rent — HRA exemption cannot be claimed if you live in your own house. You must be paying rent to a landlord.
- →Rent receipts required — if annual rent exceeds ₹1 lakh, you must provide the landlord's PAN to your employer. Rent receipts are mandatory proof.
- →Renting from parents allowed — you can pay rent to parents and claim HRA, provided the rent is genuinely paid and declared in the parent's income tax return.
- →Home loan + HRA — you can claim both home loan deductions (Section 24b, 80C) and HRA exemption if your rented house and owned house are in different cities.
- →Self-employed individuals — can claim rent deduction under Section 80GG instead of Section 10(13A), capped at ₹5,000/month or 25% of total income.
Frequently Asked Questions
Common questions about HRA exemption in India