HRA Calculator India

🏠 HRA Calculator India

Calculate your House Rent Allowance exemption as per Income Tax rules

📋 How HRA Exemption is Calculated

HRA exemption is the minimum of:


1. Actual HRA received from employer

2. 50% of basic salary (for metro cities) or 40% of basic salary (for non-metro cities)

3. Rent paid minus 10% of basic salary (if rent > 10% of basic salary)


Metro Cities: Mumbai, Delhi, Kolkata, Chennai

Note: You must have rent receipts and rental agreement to claim HRA exemption.

What is HRA (House Rent Allowance)?


House Rent Allowance (HRA) is a part of an employee’s salary provided by the employer to cover housing expenses. It is typically paid monthly and forms a significant part of the total compensation for salaried individuals living in rented properties.

How Does the HRA Exemption Work?

The Income Tax Act allows partial exemption of HRA from taxable income based on:

  • Actual HRA received
  • Rent paid by the employee
  • Basic salary of the employee

The exempted amount is the minimum of the following three:

  1. Actual HRA received

  2. Rent paid minus 10% of basic salary

  3. 50% of basic salary (for metro cities) or 40% (for non-metro cities)


Eligibility for HRA Exemption


To claim HRA exemption, the following conditions must be met:

  • Rent must be paid for residential accommodation

  • HRA should be a part of the salary structure

  • The employee must actually live in the rented house

  • City of residence (metro or non-metro) affects the exemption percentage


Conditions for Claiming HRA Exemption


Documents required to claim HRA exemption include:

  • Rent receipts or rental agreement

  • Proof of rent payment (bank statement or cash receipts)

  • Property details (name, address, etc.)


How is HRA Exemption Calculated?

The formula to calculate exempted HRA is:

Exempted HRA = Minimum of (Actual HRA received, Rent paid – 10% of Basic Salary, 50% or 40% of Basic Salary)

  • Use 50% for metro cities (Delhi, Mumbai, Kolkata, Chennai)

  • Use 40% for non-metro cities


Example 1: Metro City (Mumbai)

  • Basic Salary: ₹40,000

  • HRA Received: ₹20,000

  • Rent Paid: ₹12,000

Calculation:

  • Rent – 10% of Basic = ₹12,000 – ₹4,000 = ₹8,000

  • 50% of Basic Salary = ₹20,000

  • Minimum of ₹20,000, ₹8,000, ₹20,000 = ₹8,000

Exempted HRA = ₹8,000

Example 2: Non-Metro City (Jaipur)

  • Basic Salary: ₹30,000

  • HRA Received: ₹15,000

  • Rent Paid: ₹10,000

Calculation:

  • Rent – 10% of Basic = ₹10,000 – ₹3,000 = ₹7,000

  • 40% of Basic Salary = ₹12,000

  • Minimum of ₹15,000, ₹7,000, ₹12,000 = ₹7,000

Exempted HRA = ₹7,000


Why Use an HRA Exemption Calculator?


Benefits for Employees:

  • Instantly know your HRA tax exemption

  • Plan your tax savings efficiently

  • Avoid manual errors during tax filing


Benefits for Employers:

  • Ensures compliance with tax regulations

  • Simplifies payroll processing

  • Reduces employee queries regarding HRA


How to Use an HRA Exemption Calculator

  1. Enter your basic salary

  2. Enter the rent you pay and specify if your city is metro or non-metro

  3. The calculator will compute your HRA exemption instantly


Common Mistakes to Avoid

  • Providing incorrect rent details

  • Selecting the wrong city category

  • Not maintaining rent receipts or documentation


Tax Implications of HRA Exemption

Claiming HRA exemption helps reduce your taxable income, which leads to a lower tax burden and more take-home salary. It’s especially beneficial for employees in high-rent areas.

Frequently Asked Questions.

1. Can I claim HRA exemption if I live in my own house?

No, you must be living in rented accommodation to claim HRA exemption.