🏠HRA Calculator India
Calculate your House Rent Allowance exemption as per Income Tax rules
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.
House Rent Allowance (HRA) is a crucial component of the salary structure for many employees in India, especially those living in rented accommodations. HRA exemption allows employees to reduce their taxable income, resulting in lower taxes and higher savings.
What is HRA (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:
Actual HRA received
Rent paid minus 10% of basic salary
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: â‚ą40,000
HRA Received: â‚ą20,000
Rent Paid: â‚ą12,000
Calculation:
Rent – 10% of Basic = ₹12,000 – ₹4,000 = ₹8,000
50% of Basic Salary = â‚ą20,000
Minimum of â‚ą20,000, â‚ą8,000, â‚ą20,000 = â‚ą8,000
Exempted HRA = â‚ą8,000
Example 2: Non-Metro City (Jaipur)
Basic Salary: â‚ą30,000
HRA Received: â‚ą15,000
Rent Paid: â‚ą10,000
Calculation:
Rent – 10% of Basic = ₹10,000 – ₹3,000 = ₹7,000
40% of Basic Salary = â‚ą12,000
Minimum of â‚ą15,000, â‚ą7,000, â‚ą12,000 = â‚ą7,000
Exempted HRA = â‚ą7,000
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
Enter your basic salary
Enter the rent you pay and specify if your city is metro or non-metro
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.