If you live in a rented house and receive HRA (House Rent Allowance) from your employer, part of it may be tax-free under the old income tax regime. Knowing the exemption amount helps you plan tax and rent wisely.
HRA exemption is minimum of three amounts
- Actual HRA received from employer
- 50% of basic salary (metro cities) or 40% (non-metro)
- Actual rent paid minus 10% of basic salary
The lowest of these three is your exempt HRA. The rest is taxable.
Documents you need
- Rent receipts or rental agreement
- Landlord PAN if annual rent exceeds ₹1 lakh
- Salary slip showing HRA and basic components
Example
- Basic salary: ₹40,000/month
- HRA received: ₹20,000/month
- Rent paid: ₹18,000/month (metro)
- Run all three tests — exemption is the least of the three values
Exact exempt amount changes with your numbers. Use a calculator instead of guessing.
Important rules
- HRA exemption applies under old tax regime (not new regime in most cases).
- You cannot claim HRA if you live in own house (no rent paid).
- Metro cities typically include Delhi, Mumbai, Chennai, Kolkata.
Use Master Calc HRA Calculator
Our HRA Calculator computes exempt and taxable HRA in seconds. Combine with Income Tax Calculator to see total tax impact — free on Master Calc.
FAQ
Can I claim HRA if I pay rent to parents? Possible if genuine rent is paid and documented; tax authorities may scrutinise.
What if employer does not pay HRA? You may claim deduction under Section 80GG subject to conditions and limits.
Disclaimer: Tax rules change. Consult a CA for complex cases.