Calculate your exact HRA tax exemption. See which of the 3 conditions gives minimum exemption and how much tax you save.
HRA exemption is calculated on Basic salary
Pay rent via bank transfer and keep receipts. If rent > ₹1 lakh/year, landlord's PAN is mandatory. Paying rent to parents is allowed — but they must show rental income in their ITR. HRA is only claimable under the Old Tax Regime.
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HRA exemption is the minimum of: (1) Actual HRA received from employer, (2) 50% of basic salary for metro cities / 40% for non-metro, (3) Rent paid minus 10% of basic salary. The lowest of these three is your HRA exemption.
Yes, you can pay rent to your parents and claim HRA exemption. The rent payment must be genuine — paid via bank transfer, with a signed rental agreement. Your parents must declare this as rental income in their ITR.
No. HRA exemption is only available under the old tax regime. Under the new regime, you cannot claim HRA deduction. This is one major reason salaried employees with high rent often prefer the old regime.
You need: rent receipts (month-wise), rent agreement, proof of payment (bank statements). If annual rent exceeds ₹1 lakh, landlord's PAN card copy is mandatory.
HRA (House Rent Allowance) is one of the largest tax exemptions for salaried employees. If you receive HRA and pay rent, you can claim exemption under Section 10(13A) — reducing your taxable income by ₹1–5 lakh depending on salary and rent paid. HRA exemption is available only in the old tax regime.
HRA exemption = minimum of: (1) Actual HRA received, (2) Rent paid minus 10% of salary, (3) 50% of salary for metro cities, 40% for non-metros. The taxable HRA = Total HRA − Exempt HRA.
Yes, if you own a house and live in a rented accommodation in a different city for employment. This is common for employees working in Mumbai who own a house in their hometown. Both HRA (rent paid in Mumbai) and home loan interest (for hometown house) are claimable.
Rent receipts for every month. Rental agreement (preferred). Landlord's PAN if annual rent exceeds ₹1 lakh. Form 12BB submitted to employer. Bank transfer proof (preferred over cash payments for easy documentation).
No. HRA exemption under Section 10(13A) is available only in the old tax regime. This is one of the key reasons why salaried employees paying high rent in metros benefit from sticking with the old regime.
No. Self-employed individuals don't receive HRA as a salary component. They can claim deduction under Section 80GG (rent paid minus 10% of total income, subject to ₹5,000/month or 25% of income, whichever is lower — maximum ₹60,000/year).
If your actual rent exceeds your HRA, the exemption is still capped at the minimum of the three limits. However, if you're in the old regime and your employer's HRA is very low relative to actual rent, consider negotiating your salary structure to include higher HRA component.
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