HRA exemption
How much of your rent allowance is tax-free
Worked example
Using the default values, hra exemption gives a annual hra exemption of ₹2,28,000.
| Item | Value |
|---|---|
| Salary considered | ₹7,20,000 |
| HRA received | ₹2,88,000 |
| Rent paid | ₹3,00,000 |
| ① HRA actually received | ₹2,88,000 |
| ② Rent minus 10% of salary | ₹2,28,000 |
| ③ 50% of salary | ₹3,60,000 |
| Exemption is the lowest of the three | ₹2,28,000 |
| Exemption per month | ₹19,000 |
What you need
- Basic salary (monthly)
- DA counted for retirals
- HRA received (monthly)
- Rent paid (monthly)
- City
Questions
Can I claim HRA under the new regime?
No. The exemption exists only under the old regime. Compare both with the income tax calculator before deciding.
Which cities count as metro?
Only Delhi, Mumbai, Kolkata and Chennai, which allow 50% of salary. Everywhere else, including Bengaluru and Hyderabad, is 40%.
Important
HRA exemption is available under the old tax regime only. Landlord PAN is required where annual rent exceeds ₹1,00,000. Salary here means basic plus dearness allowance counted for retirement benefits, plus commission on turnover where applicable. Metro means Delhi, Mumbai, Kolkata or Chennai.