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FY 2025-26 Updated

HRA Exemption Calculator India

Find out exactly how much of your House Rent Allowance is tax-free using the three-condition formula.

Enter your salary details to calculate HRA exemption.

What is HRA Exemption?

House Rent Allowance (HRA) is a component of your salary paid by your employer to help cover rent expenses. Under Section 10(13A) of the Income Tax Act, a portion of HRA is exempt from income tax — this is the HRA exemption. The exempt amount reduces your taxable income, lowering your overall tax liability under the old tax regime.

The Three-Condition Formula Explained

Your HRA exemption is the minimum of three amounts, calculated monthly:

Condition 1 — Actual HRA received: The HRA component shown on your payslip.

Condition 2 — % of Basic Salary: 50% of your basic salary if you live in a metro city (Delhi, Mumbai, Chennai, Kolkata), or 40% for all other cities.

Condition 3 — Excess rent: Rent actually paid minus 10% of your basic salary. If you pay less than 10% of basic as rent, this condition gives zero exemption.

Metro vs Non-Metro Cities for HRA

Only four cities qualify as "metro" for HRA calculation: Delhi (NCR), Mumbai, Chennai, and Kolkata. Cities like Bengaluru, Hyderabad, Pune, and Ahmedabad are classified as non-metro despite their size, so the 40% rate applies. This is based on the Income Tax Act and has not been revised despite urban growth.

HRA in New vs Old Tax Regime

HRA exemption is available only under the old tax regime. If you choose the new tax regime for FY 2025-26, your HRA is fully taxable. Whether the old regime is better for you depends on whether your total deductions (including HRA exemption, 80C, 80D, home loan interest) exceed the benefit of the new regime's lower slabs and higher standard deduction of ₹75,000.

Frequently Asked Questions

HRA exemption is the minimum of: (1) Actual HRA received from your employer, (2) 50% of basic salary for metro cities (Delhi/Mumbai/Chennai/Kolkata) or 40% for non-metro cities, and (3) Rent paid minus 10% of basic salary. The smallest of these three figures is your HRA exemption.
No. HRA exemption is not available if you choose the new tax regime (Section 115BAC). Under the new regime, your entire HRA received is treated as taxable income. If HRA is large, this often makes the old regime more beneficial. Use our Old vs New Regime Comparator on the main page to check which is better for you.
Exactly four cities are designated as metro under the Income Tax Act: Delhi, Mumbai, Chennai, and Kolkata. Bangalore, Hyderabad, Pune, Ahmedabad, and all other cities use the non-metro rate of 40% of basic salary, regardless of their population or cost of living.