HRA Exemption Calculator India FY 2026-27: Save Maximum Tax on House Rent
HRA (House Rent Allowance) is one of the largest tax-saving components for salaried employees in India — but only under the old income tax regime. If you're paying rent and your salary structure includes HRA, calculating the exact exemption can save you tens of thousands of rupees annually. This guide explains the exact HRA calculation formula and how to claim it correctly for FY 2026-27.
Try HRA Calculator Free →HRA Exemption Formula — The Three-Rule Minimum
HRA exemption = Minimum of these three amounts:
1. Actual HRA received from employer 2. Actual rent paid minus 10% of basic salary 3. 50% of basic salary (metro cities) or 40% of basic salary (non-metro)
The lowest of these three is your HRA exemption. The balance HRA (received minus exempt) is taxable.
Metro vs Non-Metro Cities for HRA
Metro cities (50% HRA exemption cap): Mumbai, Delhi, Kolkata, Chennai. These four are the only "metro" cities for HRA purposes per Income Tax rules. Non-metro cities (40% cap): Bengaluru, Hyderabad, Pune, Ahmedabad, and all other cities. Many people incorrectly assume Bengaluru and Hyderabad are metro — they are not for HRA tax purposes.
HRA Example Calculation (Delhi)
Example: Annual basic salary ₹6L, HRA received ₹3L, rent paid ₹3.6L (₹30,000/month), Delhi (metro).
1. HRA received = ₹3,00,000 2. Rent paid − 10% of basic = ₹3,60,000 − ₹60,000 = ₹3,00,000 3. 50% of basic = ₹3,00,000
All three are equal at ₹3L, so HRA exempt = ₹3,00,000. Zero taxable HRA.
HRA Example Calculation (Bengaluru)
Example: Annual basic ₹8L, HRA ₹3.2L, rent paid ₹4.2L (₹35,000/month), Bengaluru (non-metro).
1. HRA received = ₹3,20,000 2. Rent − 10% of basic = ₹4,20,000 − ₹80,000 = ₹3,40,000 3. 40% of basic = ₹3,20,000
Minimum = ₹3,20,000. Taxable HRA = ₹3,20,000 − ₹3,20,000 = ₹0. Fully exempt.
HRA Conditions and Documentation
To claim HRA exemption: (1) You must actually pay rent — self-owned house disqualifies you. (2) You must have HRA in your salary structure. (3) If annual rent exceeds ₹1,00,000, you must provide landlord PAN. (4) Rent receipts or rental agreement required. (5) You cannot claim both HRA exemption and home loan principal deduction (80C) for the same property. Living in a different city from your family home allows both.
HRA Under New vs Old Regime
HRA exemption is available ONLY under the old income tax regime. Under the new regime (default from FY 2024-25), HRA is fully taxable as part of your salary. This is a key factor when deciding between regimes — if you pay high rent in a metro and have significant HRA, the old regime might still be better despite losing other deductions.
How to Use the Formly HRA Calculator
Enter your basic salary, HRA received from employer, monthly rent paid, and select metro or non-metro city. The calculator applies the three-rule formula and shows you the exact exempt amount and taxable HRA. It also shows the tax saving at your income slab rate.
Frequently Asked Questions
Can I claim HRA if my landlord is my parent?⌄
Yes. You can pay rent to parents and claim HRA exemption, provided the rent is actually paid (bank transfer preferred), the parent declares it as rental income in their ITR, and your name is not on the property. Paying rent to parents is a legitimate tax-saving strategy.
What if I have no HRA component but pay rent?⌄
If your salary has no HRA component, you can claim deduction under Section 80GG (for non-HRA employees or self-employed). The limit is ₹5,000/month or 25% of total income or rent − 10% of income, whichever is least.
Is HRA exempt if I work from home?⌄
Yes, HRA can still be claimed even if you work from home, as long as you are paying actual rent for accommodation. The exemption rules don't require you to commute to an office.
Can I claim both HRA and home loan deductions?⌄
Yes, in specific cases. If your owned house is in a different city from where you work, you can claim HRA for rented accommodation (work city) AND home loan deductions (80C principal + Section 24b interest) for your owned property.