Wealth Math.

HRA Exemption Calculator.

Determine how much of your House Rent Allowance (HRA) is exempt from income tax under Section 10(13A). Compare Metro vs Non-Metro benefits in real-time under the Old Tax Regime.

Salary & Rent Details

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Dearness Allowance (DA) can be added here if part of salary for HRA calculation.

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Metro: Delhi, Mumbai, Chennai, Kolkata (50% of basic). Non-Metro: All other cities (40% of basic).

HRA Exemption Conditions (Sec 10(13A))

Tax exemption is calculated based on the minimum of the three conditions below.

Condition 1

Actual HRA Received

₹2,40,000
₹20,000 / month
Condition 2

50% of Basic Salary

₹2,40,000
₹20,000 / month
Condition 3Min (Exempt)

Rent Paid minus 10% of Basic

₹1,68,000
₹14,000 / month
Tax-Exempt HRA (Sec 10(13A))

₹1,68,000/ year

Minimum of the three statutory conditions evaluated. This portion is completely tax-free.

Minimum of Above
HRA Breakdown SummaryTotal Received: ₹2,40,000
Exempt HRA (Tax-Free): ₹1,68,000 (70.0%)
Taxable HRA: ₹72,000 (30.0%)
Annual HRA Exemption
₹1,68,000

₹14,000 / month tax-free HRA.

Taxable HRA
₹72,000

Added to taxable salary & taxed at slab rates.

Annual Tax Saved
₹50,400

Estimated savings at 30% tax bracket.

What Qualifies as a Metro City for HRA Exemption?

According to the Indian Income Tax Act, 1961, only four cities are considered Metro for HRA calculation purposes: New Delhi, Mumbai, Kolkata, and Chennai.

All other major IT & business hubs—such as Bengaluru, Hyderabad, Pune, Gurugram, Noida, and Ahmedabad—are classified as Non-Metro cities. Residents in these locations are eligible for a 40% of Basic Salary threshold rather than 50%.

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How HRA Exemption is Calculated

The Income Tax Act specifies that your HRA exemption is the minimum of three conditions: (1) Actual HRA received from employer, (2) 50% of Basic Salary if you live in a metro city (Mumbai, Delhi, Kolkata, Chennai) or 40% for non-metro cities, and (3) Actual rent paid minus 10% of Basic Salary. The exemption is whichever of these three figures is lowest. This three-way minimum exists to prevent abuse — you cannot claim more than you actually received as HRA, more than a city-adjusted salary proportion, or more than your actual rent outgo.

What Counts as Basic Salary for HRA?

Only your Basic Salary component is used in the HRA formula — not your total CTC or gross salary. Dearness Allowance (DA) is also included if it forms part of your retirement benefits, but this is rare in private sector jobs. Many employers keep Basic Salary low (40–50% of CTC) to reduce their PF contribution liability. A low basic directly reduces your potential HRA exemption, which is why structuring your salary package with a higher Basic can be beneficial for HRA claims even though it slightly increases your PF deduction.

Rent to Parents — Rules and Requirements

Paying rent to parents is a completely legal tax strategy, provided you follow the documentation requirements: (a) Transfer rent electronically (not cash) to your parent's bank account, (b) Execute a formal rent agreement listing the property address, monthly rent, and both parties' names and signatures, (c) Your parent must declare this rental income in their ITR — if they are in the Nil or 5% tax bracket, the family's overall tax outgo is still reduced. If annual rent paid to your parent exceeds ₹1,00,000, their PAN must be quoted in your tax declaration. Note: you cannot pay rent to a spouse — the IT Department disallows this.

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