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HRA Calculator — Section 10(13A) Exemption, FY 2026-27

Free HRA calculator for salaried Indian employees. Compute your House Rent Allowance exemption under Section 10(13A) using the least-of-three formula. Our HRA calculator handles the metro vs non-metro distinction (only Mumbai, Delhi, Kolkata, Chennai qualify as metro) and flags the landlord-PAN requirement for rent > ₹1 L/year.

Last updated: Reviewed by MoneyKit EditorialMethodology

Salary & rent (annual)

Exemption breakdown

Three candidates (Section 10(13A))

Actual HRA received
₹3,00,000
50% of (basic + DA)
₹3,00,000
Rent − 10% of (basic + DA)
₹1,80,000
Exempt amount (least of 3)
₹1,80,000
Taxable HRA
₹1,20,000

⚠ Rent > ₹1L/year → landlord PAN required in ITR.

Notes

  • Exempt amount is capped by the binding term: rent paid minus 10% of (basic + DA) (₹1,80,000).
  • HRA exemption is available only in the OLD tax regime. New regime forfeits this deduction.
  • Annual rent > ₹1 lakh → you must report landlord PAN in your ITR. Without landlord PAN the AO can disallow the exemption.

How this HRA calculator works

Our HRA calculator applies the Section 10(13A) formula exactly as the Income Tax Department computes it. The HRA calculator takes four inputs — basic salary, DA (retirement-linked portion only), HRA received, and annual rent paid — and returns the tax-exempt portion along with the remaining taxable HRA. The exempt amount equals the least of three values and the HRA calculator surfaces all three so you can see which limit is binding.

The HRA calculator formula, plainly

Under Section 10(13A) read with Rule 2A of the Income Tax Rules, HRA exemption is the least of:

  1. Actual HRA received from the employer in the financial year
  2. 50% of (Basic + DA) if you live in a metro city, or 40% of (Basic + DA) otherwise
  3. Annual rent paid minus 10% of (Basic + DA)

The HRA calculator computes all three, picks the minimum, and shows which one is the binding constraint. The remaining HRA (actual received minus exempt amount) is added back to your salary income and taxed at slab rate.

Using the HRA calculator: step-by-step

  1. Enter your annual basic salary — the HRA calculator uses basic + DA as the multiplier base. Most salary slips split annual CTC into monthly components; multiply by 12.
  2. Enter DA only if it forms part of retirement benefits (i.e., counted toward PF / gratuity). For most private-sector salaries, DA is zero.
  3. Enter total HRA received in the financial year (again, monthly × 12).
  4. Enter the total rent actually paid in the year — matching the rent receipts you’ll submit to your employer.
  5. Check the “metro” box only if you live in Mumbai, Delhi, Kolkata, or Chennai. The HRA calculator applies 50% or 40% based on this single flag.

The HRA calculator output shows the three candidate amounts, the winning (lowest) figure, taxable HRA, and a landlord-PAN warning if rent exceeds ₹1,00,000/year.

HRA calculator: metro vs non-metro — four cities only

The single most-misunderstood rule. For HRA purposes under Income Tax Act Rule 2A, the “metro” definition in the Section 10(13A) Explanation is a narrow list: Mumbai, Delhi, Kolkata, Chennai. No other city qualifies — not Bengaluru, Hyderabad, Pune, Ahmedabad, Gurugram, or Noida. The HRA calculator uses a single checkbox for this because the rule is binary. A Bengaluru-based salaried employee with the same basic and rent as a Mumbai employee sees 10 percentage points less HRA limit (40% vs 50% of basic + DA).

HRA calculator examples (FY 2026-27)

Three illustrative profiles run through the HRA calculator:

When the HRA calculator shows zero exemption

If your rent is less than 10% of (basic + DA), the rent-minus-10%-basic limit becomes negative, which the HRA calculator floors at zero. Common scenarios where the HRA calculator returns zero: employees staying with parents paying nominal rent, employer-provided accommodation with token rent deduction, or owned-home occupancy while still drawing HRA. In these cases, restructure salary (drop HRA) or move to a market-rate rented place.

HRA calculator vs 80GG — which section applies?

The HRA calculator on this page computes Section 10(13A) exemption — only for salaried employees who actually receive HRA from their employer. If your salary structure has no HRA component (common for consultants, commission-only agents, or certain executive packages), use Section 80GG instead — deduction capped at least of ₹60K/year, 25% of adjusted total income, or rent minus 10% of total income. 80GG is a smaller benefit; request HRA in your salary structure where possible.

Old regime vs new regime: does the HRA calculator matter?

HRA exemption is old regime only. Under the new tax regime (default from FY 2023-24 under Section 115BAC), HRA exemption under Section 10(13A) is forfeited along with 80C, 24(b), and most other common deductions. If you’re on the new regime, the HRA calculator is informational only — no tax saving follows.

For a Mumbai renter paying ₹35K+/month, the HRA calculator typically outputs ₹3-4L of exemption — ₹90K-1.2L of tax saved at 30% slab. That single deduction often justifies opting for the old regime. Model both via our Income Tax Calculator to see the regime comparison for your specific profile.

Paying rent to parents: using the HRA calculator

Salaried employees can claim HRA while paying rent to parents, subject to strict conditions. The HRA calculator treats rent to parents identically — the Section 10(13A) formula is source-agnostic. But the tax-department scrutiny isn’t:

Round-tripping money back (rent paid to parent, parent gifts it back) is treated as a sham arrangement and disallowed. The HRA calculator output is only defensible if the underlying payment is genuine.

HRA calculator + home loan: can you claim both?

Yes, in many scenarios. Common cases where the HRA calculator output AND Section 24(b) home loan interest deduction both apply:

The HRA calculator exemption and home loan deduction are independent sections — combining them in a single financial year is legal where factually supported.

Reading your HRA calculator output: the landlord-PAN flag

When rent paid exceeds ₹1,00,000/year (₹8,333/month), the HRA calculator surfaces a warning: landlord PAN is mandatory on rent receipts submitted to your employer and in your ITR. Without landlord PAN above this threshold, the Assessing Officer can deny the exemption during scrutiny — even if the rent was genuinely paid. If your landlord doesn’t have a PAN, they must provide a Form 60 declaration (higher audit risk).

HRA calculator limitations + assumptions

How is HRA exemption calculated? A 5-minute walkthrough

HRA exemption calculation under Section 10(13A) read with Rule 2A is a three-line formula, but the trick is that you take the minimum of three quantities, not the maximum. The Income Tax Department wants the smallest plausible exemption — your job (or your CA’s) is to make sure you actually claim that smallest number rather than miss it.

Annualise everything first. Monthly basic × 12. Monthly HRA × 12. Monthly rent × 12. Then evaluate the three caps. The rent-minus-10%-of-basic cap is the one that most often binds — if your rent is moderate and your basic is high, this single ceiling slashes your exemption far below the 40%/50% notional cap.

What is the HRA formula in plain English?

HRA exemption = MIN(Actual HRA received, 50%×(Basic+DA) for metro OR 40%×(Basic+DA) for non-metro, Annual rent − 10%× (Basic+DA)). Everything is annual. DA counts only if it forms part of retirement benefits — which is rare in private sector employment but routine in government / PSU pay structures. Taxable HRA = HRA received − exempt amount, and this gets added back to your salary income at slab rate.

Three worked examples (FY 2026-27, ₹50K basic / ₹25K HRA / ₹30K rent)

Same salary structure, three different scenarios — each shows which of the three ceilings becomes the binding constraint and why. Monthly numbers below convert to annual: basic ₹6,00,000, HRA ₹3,00,000, rent ₹3,60,000.

Example A — Mumbai (metro, 50% cap)

A salaried employee in Mumbai with basic ₹50,000/month (₹6,00,000/year), HRA ₹25,000/month (₹3,00,000/year), and rent ₹30,000/month (₹3,60,000/year). The three candidates:

All three ceilings tie at ₹3,00,000 — exempt amount = ₹3,00,000, taxable HRA = ₹0. This is the optimal salary structure for a Mumbai renter at this pay level — every rupee of HRA gets shielded. Tax saved at 30% slab + cess: ₹93,600.

Example B — Bangalore (non-metro for HRA, 40% cap)

Same employee profile, but workplace is Bengaluru. Despite the city’s tier-1 status and equivalent rents, the HRA Rule 2A treats Bangalore as non-metro:

Minimum is the 40% cap = ₹2,40,000. Taxable HRA = ₹3,00,000 − ₹2,40,000 = ₹60,000. The Bengaluru employee pays tax on ₹60,000 more HRA than the Mumbai colleague on identical pay — roughly ₹18,720 extra tax at 30% + 4% cess, purely due to the metro/non-metro asymmetry.

Example C — home-town with parents as landlord

Same employee profile, parents own the residential property in Pune (non-metro), rent ₹30,000/month transferred via NEFT to parent’s bank account. Calculation is identical to Example B: exempt ₹2,40,000, taxable ₹60,000. What changes is the documentation burden:

Round-tripping (parent gifting back the rent) is the single biggest audit red flag — courts have struck down arrangements where the rent flows back via gift, inheritance advance, or household-expense transfers within the same financial year.

Is Bangalore a metro for HRA?

No — Bangalore is not a metro for HRA purposes. Rule 2A of the Income Tax Rules names only four cities as metros: Delhi, Mumbai, Kolkata, Chennai. Bengaluru falls in the non-metro 40% bucket along with Hyderabad, Pune, Ahmedabad, Gurugram, Noida, and Surat. Many salaried IT employees mistakenly check the metro box because Bangalore has metro-equivalent cost of living — but the HRA statute uses a fixed 4-city list that hasn’t been amended since 1964. The same mistake is common for Hyderabad and Pune residents.

Can I claim HRA if I live with parents?

Yes — the Income Tax Act does not bar HRA on rent paid to parents. The Bombay ITAT’s ruling in Bajrang Prasad Ramdharani v. ACIT and subsequent decisions confirm that rent paid to family members qualifies, provided the arrangement is genuine. Four guardrails: (1) parent is the legal owner of the property; (2) you are not a co-owner; (3) rent is at fair market value (benchmark against MagicBricks/99acres listings in the same locality and configuration); (4) money actually flows from your account to theirs and shows up in their ITR. If any of these break, the arrangement is treated as a sham and disallowed under the general anti-avoidance principle in Section 23(1).

Is HRA exempt under New Tax Regime?

No. Section 115BAC(2)(i) explicitly disallows the HRA exemption under Section 10(13A) for any taxpayer opting for the new regime. The entire HRA received is fully taxable at slab rate. This is the single most consequential deduction loss for salaried renters — for a Mumbai-based employee on ₹15L CTC with ₹4L HRA component and ₹4L rent, old-regime exemption of ₹3-3.5L typically translates to ₹1.0-1.1L tax savings, easily exceeding the new-regime rate reduction. Always model both regimes via our Income Tax Calculator before declaring your regime choice to HR.

Sources & last-verified dates

All statutory references below were cross-checked against the official Income Tax Department portal on the verification date shown. For exact section text and amendments, follow the source link.

HRA documentation checklist — Form 12BB, receipts, PAN

To claim HRA exemption end-to-end, payroll needs documentary evidence by the year-end declaration cutoff (typically mid-January). The thresholds are statutory; missing any one gives the Assessing Officer grounds to disallow the exemption during scrutiny — even if the rent was genuinely paid.

Form 12BB

Mandatory year-end declaration to employer listing month-wise rent paid, landlord details, and PAN (if rent > ₹1L/year). Notified via CBDT Notification No. 30/2016. Submit before payroll’s January cutoff.

Rent receipts (₹3,000/month threshold)

CBDT Circular 8/2013: rent receipts required for any month where rent exceeds ₹3,000. Receipt must show landlord name, address, rent amount, month covered, and signature. Affix ₹1 revenue stamp if rent > ₹5,000.

Landlord PAN (₹1L/year threshold)

CBDT Circular No. 8/2013: report landlord PAN if annual rent exceeds ₹1,00,000 (₹8,333/month). If landlord has no PAN, get a Form 60 self-declaration — raises audit risk but is accepted.

Rent agreement

Stamp-paper agreement signed by both parties, listing monthly rent, security deposit, tenancy period, and property address. Registration mandatory if tenancy exceeds 11 months in most states. Retain copy for 6 financial years.

Bank-transfer proof

NEFT/UPI/IMPS/cheque statement showing monthly transfers to landlord’s account. Cash rent payments are technically allowed but heavily scrutinised — bank trail defeats most disallowance arguments.

TDS on rent — Section 194-IB (₹50K/month threshold)

Individual tenants paying rent > ₹50,000/month must deduct 2% TDS (rate revised from 5% by Finance Act 2024) in the last month of tenancy or financial year. Deposit via Form 26QC and issue Form 16C to landlord within 15 days.

Common HRA rejection reasons — audit red flags

The CBDT’s e-Verification Scheme and CASS scrutiny algorithms flag specific patterns. Most disallowances follow one of these failure modes — addressing them upfront defeats 90% of HRA audit notices.

HRA Calculator — Frequently Asked Questions

How is HRA exemption calculated under Section 10(13A)?

HRA exemption is the least of three amounts: (a) actual HRA received from employer, (b) 50% of (basic + DA) if you live in a metro [Mumbai, Delhi, Kolkata, Chennai] or 40% otherwise, (c) rent paid − 10% of (basic + DA). Only the lowest of these three applies; the rest of your HRA is taxable. The formula is codified in Rule 2A of the Income Tax Rules, 1962.

What is the HRA formula? Why exactly three values?

The HRA formula evaluates three statutory ceilings simultaneously: (1) you cannot exempt more than the HRA you actually received, (2) you cannot exempt more than 40-50% of basic+DA (a notional cap tied to salary structure), and (3) you cannot exempt rent you did not effectively bear after a 10% self-contribution. The minimum of these three is the exempt amount. Each formula is a separate guardrail — receiving more HRA than rent paid, or living in a low-rent setup with high basic, both reduce the exemption.

Is Bangalore a metro for HRA purposes?

No. Despite being a tier-1 city, Bangalore (Bengaluru) is NOT a metro for HRA computation. The Income Tax Rules recognize only four cities as metros under Rule 2A: Delhi, Mumbai, Kolkata, and Chennai. Bengaluru, Hyderabad, Pune, Ahmedabad, Gurugram, Noida, and Surat all qualify for the 40% (not 50%) cap on basic+DA. This often surprises Bengaluru-based IT employees — they get 10 percentage points less HRA limit than a Mumbai colleague on identical pay.

Which cities count as "metro" for HRA purposes?

Only Mumbai, Delhi, Kolkata, and Chennai. Bengaluru, Hyderabad, Pune, Ahmedabad, and other tier-1 cities are NOT metros under Rule 2A for HRA — this is a very common misconception. They qualify only for the 40% cap. The HRA metro list (4 cities) is narrower than the LTC metro list (8 cities) and the urban-agglomeration census definition — different statutes, different lists.

Can I claim HRA exemption in the new tax regime?

No. HRA exemption under Section 10(13A) is NOT available under the new tax regime (default from FY 2023-24 onwards under Section 115BAC). The entire HRA received is fully taxable under New Regime. If HRA is a large part of your CTC and you live in rented accommodation, running both regimes through the Income Tax Calculator usually shows the old regime wins — a Mumbai renter on ₹15L CTC with ₹4L HRA exemption typically saves ₹1.2L tax by staying with old regime.

Is HRA exempt under New Tax Regime?

No, HRA is NOT exempt under the New Tax Regime. Section 10(13A) is explicitly disallowed under Section 115BAC(2)(i), along with 80C, 80D, 24(b) home loan interest, and most other common deductions. The new regime trades these deductions for lower slab rates. For salaried renters, HRA alone often exceeds the rate-cut benefit, making old regime more efficient. Run both through our Income Tax Calculator to see the regime-comparison for your profile.

Can I claim HRA if I own a house in the same city?

Yes — owning a house in the city where you live does NOT automatically disqualify you from HRA. Section 10(13A) only requires that you actually pay rent for the residential accommodation you occupy. If your owned house is genuinely rented out, under construction, geographically distant from workplace, or factually uninhabitable, you can rent another place and claim HRA. You can simultaneously claim Section 24(b) interest deduction on the owned-house home loan. The two sections are independent.

Do I need my landlord's PAN to claim HRA exemption?

If your annual rent exceeds ₹1 lakh (₹8,333/month), you must report the landlord's PAN in your ITR (CBDT Circular 8/2013). Without landlord PAN, the Assessing Officer can disallow the exemption during scrutiny. If the landlord doesn't have a PAN, get a declaration from them in Form 60 — though this raises audit risk. Rent receipts for any month with rent above ₹3,000 must also be submitted via Form 12BB to the employer.

Can I claim HRA while living in a house owned by my parents?

Yes, provided (1) you actually pay rent to your parents with proof (bank transfer, not cash), (2) your parents include that rent as income in their ITR, (3) you're not a co-owner of the property, and (4) the rent is at fair market value (not artificially inflated). This is a valid planning strategy upheld by ITAT in multiple rulings (Bajrang Prasad Ramdharani v. ACIT). Documentation: rent agreement on stamp paper, monthly bank transfers, parent's PAN if rent > ₹1L/year, and rent receipts signed by parent.

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