HRA Exemption Calculator
Calculate your House Rent Allowance (HRA) tax exemption under Section 10(13A). Compare all 3 statutory criteria for metro (50%) and non-metro (40%) cities with the binding limit highlighted.
Your HRA tax exemption is strictly the lowest of the three legal limits. Paying more rent only boosts tax savings if Limit 2 is currently binding.
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.
Worked Example — Mumbai (metro), Basic ₹50,000, HRA ₹25,000, Rent ₹22,000
Metro vs Non-Metro Cities
From FY 2026-27, eight cities qualify for the 50% of basic limit. All other cities — including Surat, Jaipur, and Lucknow — use 40%. Before FY 2026-27 only the first four qualified:
The classification is statutory (from the Income Tax Act) and has not been expanded to include other large cities despite several representations to CBDT.
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. From FY 2026-27 eight cities get the 50% limit: Mumbai, Delhi (NCT), Kolkata, Chennai, Bengaluru, Hyderabad, Pune, and Ahmedabad. Every other city, however large, uses 40%. For FY 2025-26 and earlier only the first four qualified.
References
- Section 10(13A) of the Income Tax Act, 1961
- Central Board of Direct Taxes (CBDT) — HRA exemption computation rules
Last reviewed July 2026