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HRA exemption calculator

How much of my HRA is exempted from tax? Use Pazcare’s HRA calculator to calculate the amount of House Rent Allowance that is non-taxable!

Calculate your HRA exemption now!

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The amount of money earned before any additions or deductions are applied to earnings.
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The amount of money added to base salary due to inflation. Mark 0 if you don’t receive DA
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Part of the salary the employer pays to meet the house rent expenses of the employee
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Taxable House Rent Allowance
₹ 5,000
40% of Basic Salary
₹ 20,000
HRA received
₹ 5,000
Excess of Rent paid over 10% of salary
₹ 5,000
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The least of the above three is exempt from HRA
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Amount of Exempted HRA
₹ 20,000
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HRA chargeable to tax
₹ 5,000
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What is HRA or House Rent Allowance?

House Rent Allowance, commonly known as HRA is an allowance paid by the employer or the organisation to its employees as a part of the salary. This allowance is provided as compensation for the employees for their monthly house rent.

What is HRA exemption in income tax?

According to the Income tax act of 1961 section 10 (13A) and rule number 2A, HRA provided by the employer is not taxable. Hence salaried employees or individuals can claim this as per the terms and conditions.

In case you are self-employed, the House Rent Allowance or HRA exemption can be claimed under section 80GG of the Income tax act of 1961.

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In case salaried employees do not receive an HRA allowance as a part of their salary, one can use the 80GG section of the Income tax act of 1961 to claim the HRA tax exemptions.

One should be also aware that the tax exemption of the HRA allowance stays true only if the individual lives in a rented house and not their own residence.

What is HRA exemption in income tax?

The HRA calculation for salaried employees is done based on a certain condition. The lowest among the following will be the exempted HRA from the salary.

  • The House Rent Allowance paid by the employer per annum
  • If you are an individual living in a metropolitan city, then 50% of ( Basic salary + Dearness allowance) per annum
  • If you are an individual residing in a non-metro city then 40% of (Basic salary + Dearness allowance) per annum
  • Actual rent paid per annum - 10% of (Basic salary + Dearness allowance) per annum

Hence, the lowest value among these conditions is the HRA exempted from the Income tax.

HRA calculation with an example

Let us imagine Rishab works in an IT firm in New Delhi and earns ₹80,000 as his monthly salary. He lives in an apartment and pays a rent of ₹15,000 a month. Here is his salary breakdown.

Particulars Amount per month Amount per year
Basic salary ₹30,000 ₹30,000 * 12 = ₹360,000
Dearness Allowance ₹10,000 ₹10,000 * 12 = ₹120,000
House Rent Allowance (HRA) ₹20,000 ₹20,000 * 12 = ₹240,000
Other allowance* ₹20,000 ₹20,000 * 12 = ₹240,000

He pays a rent of ₹15,000 a month hence, in a year the actual rent paid is ₹180,000.

Let us break this down based on the 3 conditions mentioned above.

HRA paid by the employer (p.a) in ₹ Living in a metro city- 50% of ( Basic salary + DA) (p.a) in ₹ Actual rent paid - 10% of (Basic salary + DA) (p.a) in ₹
15,000 * 12 50% (360,000 + 120,000) 180,000 - 10% (360,000 + 120,000)
= 180,000 = 240,000 = 132,000

Among the 3 conditions the least is Actual rent paid - 10% of (Basic salary + DA) (p.a) which is ₹132,000. Hence, this will be your HRA exemption from the Income tax.

In the case of a non-metro city, the HRA calculation formula is 40% of (Basic salary + Dearness allowance) per annum. The rest of the conditions stays the same.

HRA exemption on home loans and rented residence

Let us imagine that the employee lives in a rented residence in New Delhi and has a house in Chennai which is rented to someone else. This is a house under a home loan for which the employee pays his EMI.

In the above case, the employee can claim his HRA exemption on both the home loan and the rent paid.

However, the employee has to declare the income gained through the rented property in Chennai for which he pays the home loan and pay the tax for the income earned.

In case of a situation where the property owned and the employee’s rented residence is in the same city, then he/she is not eligible for HRA exemption. The employee has to prove that the property owned is far away from the actual job location and cannot be used. Once proven, then he/she is eligible for HRA tax exemption.

Documents required for HRA tax exemption

In order to claim the exemption of the Income-tax for your HRA, the documents required are

  • The PAN card details and a copy of the same of the landlord, in case the rent paid per annum exceeds 1 lakh.
  • The monthly rent receipts paid by the employee. The receipt should contain the following details
  • Names of the tenant and landlord
  • Date of payment
  • PAN card details of the landlord
  • Address of the rental property
  • A revenue stamp with the landlord’s signature
  • Duration of tenancy/stay
  • Rental deed/agreement if needed.

Frequently asked questions

HRA calculator online

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Access the simple HRA calculator online to calculate the income tax exemption on your house rent allowance.

Can I get an exemption from HRA if I stay in my own house?

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No, HRA tax exemption is applicable only on a rental property.

How is my HRA calculated?

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HRA in India is calculated based on the condition that the lowest among the following set conditions is the exempted amount from income tax.

  • The House Rent Allowance paid by the employer p.a
  • If you live in a metro city, then 50% of ( Basic salary + Dearness allowance) p.a
  • If you live in a non-metro city then 40% of (Basic salary + Dearness allowance) p.a
  • Actual rent paid - 10% of (Basic salary + Dearness allowance) p.a