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HRA Exemption Calculator

Finance

Calculate your HRA tax exemption under Section 10(13A) — metro (50%) or non-metro (40%) — with all three limits shown so you can see which one is binding.

City type

Old Tax Regime only. HRA exemption under Section 10(13A) is not available if you opt for the New Tax Regime.
HRA Exempt (annual)

HRA exemption is the lowest of three limits — increasing your rent paid only helps if that limit is currently the binding one.

What is HRA exemption?

House Rent Allowance (HRA) is a salary component employers pay toward an employee's rent expenses. Under Section 10(13A) of the Income Tax Act, salaried employees who actually pay rent can exclude a portion of that HRA from their taxable income — the exempt amount is calculated as the minimum of three independently computed limits.

This exemption is available only under the Old Tax Regime. If you have opted for the New Regime, your entire HRA is taxable and this calculator does not apply.

HRA Exempt Amount

The exempt amount is the lowest of three limits — all computed annually.

Formula
Limit 1Actual HRA received (annual)
Limit 2Rent paid − 10% of annual basic salary
Limit 350% of annual basic (metro) or 40% (non-metro)
Exempt = minimum of Limit 1, 2, and 3

Worked Example — Mumbai (metro), Basic ₹50,000, HRA ₹25,000, Rent ₹22,000

Limit 1 — HRA received (annual)₹3,00,000.00
Limit 2 — Rent paid − 10% × Basic ← binding₹2,64,000.00 − ₹60,000.00 = ₹2,04,000.00
Limit 3 — 50% × Basic (metro)₹3,00,000.00

Exempt (tax-free)

₹2,04,000.00

Taxable HRA

₹96,000.00

Limit 2 is binding because rent (₹2,64,000.00) minus 10% of basic (₹60,000.00) gives ₹2,04,000.00 — less than Limit 1 (₹3,00,000.00) and Limit 3 (₹3,00,000.00).

Metro vs Non-Metro Cities

Only four cities qualify for the 50% of basic limit under Section 10(13A). All other cities — including Bangalore, Hyderabad, Pune, Ahmedabad, and Surat — use 40%:

MumbaiDelhi (NCT)KolkataChennai

The classification is statutory (from the Income Tax Act) and has not been expanded to include other large cities despite several representations to CBDT.

Frequently Asked Questions

Limit 1: Actual HRA received from the employer. Limit 2: Annual rent paid minus 10% of annual basic salary (floored at zero). Limit 3: 50% of annual basic salary if you live in Mumbai, Delhi, Kolkata, or Chennai — 40% for any other city. The exempt amount is whichever limit is lowest.

Common Mistakes to Avoid

  • HRA exemption is not available under the New Tax Regime. Section 10(13A) operates only under the Old Regime. If you have opted for the New Regime, your entire HRA is taxable as salary — there is no partial exemption.
  • Limit 2 uses annual basic — not monthly. The 10% threshold that reduces your excess rent is 10% of your annual basic salary, not 10% of monthly basic. Applying it monthly gives a different (incorrect) exempt amount.
  • All three limits must be computed — exemption is the minimum. A common shortcut is to use only the 50%/40% of basic rule, which will overstate the exemption whenever rent paid minus 10% of basic (Limit 2) or actual HRA received (Limit 1) is lower.
  • Metro classification is by statute, not geography. Only four cities are statutorily classified as 'metro' for HRA purposes: Mumbai, Delhi (NCT), Kolkata, and Chennai. Bangalore, Hyderabad, Pune, and other large cities are 'non-metro' and use the 40% limit, not 50%.

References

  • Section 10(13A) of the Income Tax Act, 1961
  • Central Board of Direct Taxes (CBDT) — HRA exemption computation rules

Last reviewed July 2026

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