How to Calculate HRA Exemption Under the Old Tax Regime (India)
Find the part of your house rent allowance that is exempt from tax, using the lowest of three amounts: HRA received, rent minus 10 percent of salary, and 50 or 40 percent of salary.
If you receive House Rent Allowance and pay rent, part of that allowance can be exempt from income tax under the old regime. Many people leave money on the table because the rule has three parts and is easy to get wrong.
Quick answer
The exempt amount is the lowest of:
- The actual HRA received.
- Rent paid minus 10 percent of basic salary (plus DA).
- 50 percent of basic salary plus DA if you live in a metro city (Delhi, Mumbai, Kolkata, Chennai), otherwise 40 percent.
The rest of the HRA is taxable. This exemption is not available under the new tax regime.
Worked example
Monthly: basic + DA ₹40,000, HRA received ₹16,000, rent ₹15,000, metro city.
- Actual HRA = ₹16,000
- Rent − 10 percent of basic = 15,000 − 4,000 = ₹11,000
- 50 percent of basic = ₹20,000
The lowest is ₹11,000 a month, so ₹1,32,000 a year is exempt.
Using the calculator
- Enter monthly basic salary plus DA.
- Enter HRA received and rent paid.
- Choose whether you live in a metro city.
- Read the exempt and taxable HRA.
Conditions and documents
- You must actually pay rent.
- If annual rent exceeds ₹1,00,000, give your landlord's PAN to your employer.
- Keep rent receipts or the rental agreement.
- Paying rent to a parent is allowed if it is genuine and the parent declares the income.
Notes
Tax rules change each budget. This tool applies the long-standing formula; confirm the current rules with your employer or a tax adviser.
