HRA Calculator
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The three tests, and why the smallest wins
Section 10(13A) does not give you a percentage. It gives three figures and exempts whichever is smallest, which stops the allowance being used to shelter income:
- The HRA you actually received. You cannot exempt more than you were given.
- Rent paid minus 10% of salary. The first slice of rent is treated as something you would have paid anyway.
- 50% of salary in a metro, 40% elsewhere. A ceiling tied to what you earn.
The mistake that costs people the most
Using the whole CTC as "salary". Here salary means basic pay, plus dearness allowance where it counts towards retirement benefits, plus commission fixed as a percentage of turnover — nothing else. Putting CTC in inflates test three and, more often, test two, and the claim falls apart when the employer checks it against your payslip.
Only four metros
Delhi, Mumbai, Kolkata and Chennai. Bengaluru and Hyderabad are not metros for HRA however much rent costs there, and Gurgaon and Noida are not Delhi. The 40% figure applies.
What you should be able to show
- Rent receipts for the months you are claiming.
- The rent agreement, if your employer asks for it.
- The landlord's PAN once yearly rent passes ₹1,00,000.
- Proof that the rent was actually paid — a bank transfer is far stronger than cash.
You can produce the receipts with the rent receipt generator, which uses the same ₹1,00,000 rule.
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Frequently Asked Questions
It is the least of three figures: the HRA actually received, the rent paid minus 10% of salary, and 50% of salary if you live in a metro or 40% if you do not. Whichever is smallest is exempt; the rest of your HRA is taxed.
Only four — Delhi, Mumbai, Kolkata and Chennai. Bengaluru, Hyderabad, Pune and Gurgaon are not metros for this purpose no matter how expensive they are, so they take the 40% figure.
Basic salary, plus dearness allowance if it forms part of retirement benefits, plus any commission fixed as a percentage of turnover. Not the whole CTC, and not other allowances — using CTC by mistake is the commonest error and it inflates the exemption.
No. The HRA exemption is one of the deductions the new regime removes. It applies only if you file under the old regime, so compare both before choosing.
Then nothing is exempt. The second test — rent minus 10% of salary — comes out at zero or below, and the exemption is the least of the three. Living in your own house means the whole HRA is taxable.
Yes, if your rent for the year is more than ₹1,00,000. Your employer has to collect it, and a claim without it is usually rejected.
It applies the section 10(13A) formula as written, which is arithmetic and not a matter of opinion. But your own salary structure decides what goes into it, so check the figures against your payslip and Form 16.