HRA Exemption Calculator — Section 10(13A) Tax Savings
This HRA Exemption Calculator tells you exactly how much of your House Rent Allowance is tax-free under Section 10(13A). Enter your basic salary, HRA received, and rent paid — the tool computes all three limits and picks the lowest as your exemption. Shows your taxable HRA, annual tax savings, and flags if you should consider the old vs new regime. Only works under the old tax regime — the new regime does not allow HRA exemption.
Calculate Your HRA Exemption
How HRA Exemption Is Calculated
The HRA exemption under Section 10(13A) of the Income Tax Act, 1961, read with Rule 2A of the Income Tax Rules, allows salaried employees to claim a portion of their HRA as tax-free. The exemption is not the full HRA — it is the lowest of three computed amounts:
A. Actual HRA received from employer
B. Rent Paid − 10% of (Basic + DA)
C. 50% of (Basic + DA) for Metro cities
OR 40% of (Basic + DA) for Non-Metro cities
Taxable HRA = Total HRA Received − HRA Exemption
Salary for HRA = Basic + DA (forming part of retirement benefits) + Commission (% of turnover)
Worked Example: Metro City Employee
Ravi works in Mumbai. Basic + DA: ₹40,000/month. HRA received: ₹20,000/month. Rent paid: ₹22,000/month.
| Component | Calculation | Amount (₹/month) |
|---|---|---|
| A. Actual HRA | As received | ₹20,000 |
| B. Rent − 10% of Salary | ₹22,000 − (10% × ₹40,000) | ₹18,000 |
| C. 50% of Salary (Metro) | 50% × ₹40,000 | ₹20,000 |
| Exemption (Minimum) | ₹18,000 | |
| Taxable HRA | ₹20,000 − ₹18,000 | ₹2,000 |
CA Tip: Many employees do not realise that if rent paid is less than 10% of basic salary, the HRA exemption via option B becomes zero or negative — effectively making it the lowest, which means very low exemption. For HRA to be meaningful, your rent must exceed 10% of your basic + DA. If rent is low, the exemption will be minimal regardless of how high your HRA component is.
Conditions for Claiming HRA Exemption
Not everyone can claim HRA exemption. The Income Tax Act prescribes specific conditions:
Mandatory Requirements
You must be a salaried employee receiving HRA as a specific component in your salary structure. You must actually live in rented accommodation and pay rent. The accommodation must be residential — commercial rent does not qualify. You must have opted for the old tax regime — the new regime does not allow Section 10(13A) exemption.
Documentation Required
Rent receipts are essential — they should contain the landlord name, address, rent amount, and payment period. A formal rent agreement strengthens your claim. If annual rent exceeds ₹1 lakh, the landlord's PAN is mandatory under Rule 2A proviso. If the landlord does not have PAN, a signed declaration in Form 60 is required. Bank transfer proof of rent payments is strongly recommended.
TDS on Rent (Section 194-IB)
If your monthly rent exceeds ₹50,000, you must deduct TDS at 2% before paying rent to your landlord under Section 194-IB. File Form 26QC and issue Form 16C to the landlord within 30 days of month-end. This obligation applies regardless of whether you are claiming HRA exemption or not. Failure attracts interest under Section 201 and penalty under Section 271H.
Special Cases & Tax Planning Strategies
Paying Rent to Parents
You can pay rent to your parents and claim HRA exemption — this is a legitimate and commonly used tax planning strategy upheld by the Income Tax Appellate Tribunal in multiple rulings. Requirements: formal rent agreement between you and your parent, bank transfer of rent (not cash), rent receipts, and your parent must declare the rental income in their ITR. If your parent is in a lower tax bracket or has no other income, the family saves tax overall.
Own House in Another City
If you own a house in City A but work in City B and live in rented accommodation, you can simultaneously claim: HRA exemption on rent paid in City B, home loan interest deduction under Section 24(b) up to ₹2 lakh for the house in City A, and principal repayment under Section 80C. This dual benefit significantly reduces taxable income under the old regime.
Shared Accommodation
If you share rented accommodation with a flatmate, each person can claim HRA exemption on their share of rent — provided each has a separate rent receipt from the landlord for their portion. Joint rent agreements should clearly mention each tenant's share. Both tenants can independently compute their HRA exemption.
No HRA in Salary? Use Section 80GG
If your employer does not provide HRA (common for self-employed and some private sector employees), you can claim rent deduction under Section 80GG — covered in the next section.
Need Help Optimising HRA & Tax? Patron Accounting reviews salary structures, advises on old vs new regime selection, and handles ITR filing with maximum HRA benefit for salaried employees across India. Get expert tax planning help →
Section 80GG — For Those Without HRA
If you are self-employed, a freelancer, or a salaried employee whose employer does not provide HRA as a salary component, you can claim rent paid under Section 80GG of the Income Tax Act. This is available only under the old tax regime.
A. ₹5,000 per month (₹60,000/year)
B. 25% of Total Income (before 80GG deduction)
C. Rent Paid − 10% of Total Income
Conditions: you must not receive HRA from any employer, you must not own a residential property in the city of employment, and you must file Form 10BA declaring that you do not own a house at the place of employment. This section benefits freelancers, consultants, and employees of organisations that do not include HRA in their CTC structure.
