HRA exemption is only available in the Old Tax Regime
If you've opted for the New Regime, you cannot claim HRA exemption — but you get a flat ₹75,000 standard deduction instead. Switch to the old regime to benefit from HRA if your rent + other deductions exceed the standard deduction advantage. Compare regimes →
Where do you live?
Metro cities
MumbaiDelhiKolkataChennai
Enter your monthly figures — type a value or drag the slider
₹
₹5K₹5L
₹
₹0₹3L
₹
₹0₹3L
%
5%30%
Monthly HRA exempt
₹20,000
₹2,40,000 / year
Monthly HRA taxable
₹0
₹0 / year
Annual tax saved
₹74,880
at 30% slab + cess
How your exemption is calculated
HRA exemption = the minimum of these three conditions. The binding (lowest) value is highlighted.
① Actual HRA received← BINDING MIN
The HRA component in your salary slip
₹20,000
② Rent paid − 10% of Basic+DA
₹25,000 − ₹5,000 (10% of basic)
₹20,000
③ 50% of Basic+DA (metro)
50% × ₹50,000
₹25,000
HRA exempt (monthly)
₹20,000
→
HRA taxable (monthly)
₹0
→
Annual tax saved
₹74,880
Annual HRA summary
Particulars
Monthly
Annual
Basic + DA
₹50,000
₹6.00 L
HRA received
₹20,000
₹2.40 L
Rent paid
₹25,000
₹3.00 L
HRA exempt (Sec 10(13A))
₹20,000
₹2.40 L
HRA taxable
₹0
₹0
Tax saved (30% + cess)
₹6,240
₹74,880
Formula used — Section 10(13A)
HRA Exemption = MIN(①, ②, ③)
① Actual HRA received from employer
② Rent paid − 10% of (Basic + DA)
③ 50% of (Basic + DA) [metro city]
Example: ₹50,000 basic · ₹20,000 HRA · ₹25,000 rent · Metro
① Actual HRA = ₹20,000 ② ₹25,000 − 10% × ₹50,000 = ₹20,000 ③ 50% × ₹50,000 = ₹25,000 Exempt = MIN(₹20,000, ₹20,000, ₹25,000) = ₹20,000/month
What is HRA Exemption? Complete Guide — Section 10(13A)
House Rent Allowance (HRA) is a component of your salary paid by the employer to help cover rental expenses. Under Section 10(13A) of the Income Tax Act, a portion of the HRA you receive is exempt from tax — provided you actually pay rent and opt for the old tax regime.
HRA exemption is one of the most valuable tax benefits for salaried employees in India. A person in the 30% tax bracket paying ₹25,000/month in rent in a metro city can save up to ₹74,880 in taxes every year through HRA exemption alone — without any additional investment.
Metro vs Non-Metro — which cities get 50%?
Metro cities — 50% of Basic+DA
Only these 4 cities qualify under Income Tax rules
Mumbai
Delhi
Kolkata
Chennai
Note: Bengaluru, Hyderabad, Pune are NOT metro for Income Tax purposes — despite being major cities.
Non-Metro — 40% of Basic+DA
All other cities, including these major ones
Bengaluru
Hyderabad
Pune
Ahmedabad
Jaipur
Lucknow
Chandigarh
Kochi
Indore
Nagpur
Optimising HRA — what rent should you pay?
Paying more rent doesn't always increase your exemption — condition ① (actual HRA) and ③ (% of basic) create hard ceilings. Here's how the three conditions interact for a ₹60,000/month basic salary in a metro:
Monthly rent
Cond ①
Cond ②
Cond ③
Exemption
Taxable HRA
₹10,000
₹25,000
₹4,000
₹30,000
₹4,000
₹21,000
₹15,000
₹25,000
₹9,000
₹30,000
₹9,000
₹16,000
₹20,000
₹25,000
₹14,000
₹30,000
₹14,000
₹11,000
₹25,000
₹25,000
₹19,000
₹30,000
₹19,000
₹6,000
₹30,000
₹25,000
₹24,000
₹30,000
₹24,000
₹1,000
₹35,000
₹25,000
₹29,000
₹30,000
₹25,000
Nil
₹40,000
₹25,000
₹34,000
₹30,000
₹25,000
Nil
Assumes: Basic ₹60,000 · HRA received ₹25,000 · Metro · Cond ③ = ₹30,000 (50% of ₹60,000)
Can you pay rent to parents and claim HRA?
Yes — but with strict compliance requirements. Paying rent to parents and claiming HRA is a legitimate and common tax-saving strategy, but the Income Tax department scrutinises it closely. Here's how to do it right:
📄
Rent agreement
A proper stamp-paper rent agreement signed by you and your parent (the landlord).
🏦
Bank transfer only
Pay rent via NEFT/IMPS/cheque — never cash. Bank statements are your proof.
🧾
Rent receipts
Collect signed rent receipts monthly. If annual rent > ₹1L, parent's PAN is mandatory.
📊
Parent's ITR
Your parent must declare this rental income in their ITR. It's taxable in their hands.
If your parent is in a lower tax bracket (or has no other income), the family as a whole saves tax — your exemption saves at your rate, while the rental income is taxed at your parent's lower rate (or not at all under ₹3L basic exemption).
Is old regime still better for you?
Enter all your deductions and get a live new vs old regime comparison
Can I claim both HRA exemption and home loan deduction?▼
Yes — you can claim both simultaneously, provided you have a genuine reason. For example: you own a house in City A and have taken a home loan on it, but you work in City B and pay rent there. In this case, you can claim home loan principal (80C), home loan interest (Section 24b, up to ₹2L), and HRA exemption on the rent you pay in City B. The IT department may question this, so have solid documentary evidence — offer letter showing your work city, rent agreement in City B, and home loan documents for City A.
What if my employer doesn't give HRA as a separate component?▼
If HRA is not part of your salary structure, you cannot claim HRA exemption under Section 10(13A). However, you may be able to claim deduction under Section 80GG if you don't receive HRA and pay rent. Section 80GG allows a deduction of up to ₹60,000 per year (₹5,000/month) — but only if neither you nor your spouse owns a house. Consult your employer's HR to restructure your CTC to include an HRA component, which is usually more beneficial.
Is HRA exemption available in the new tax regime?▼
No. HRA exemption under Section 10(13A) is not available if you opt for the new tax regime. Under the new regime, you get a flat ₹75,000 standard deduction (FY 2024-25) but cannot claim HRA, LTA, Section 80C, or most other deductions. If your HRA exemption alone exceeds ₹75,000 annually, the old regime is likely more beneficial — use the Income Tax Calculator to compare your specific numbers.
My landlord is refusing to give PAN — what do I do?▼
If annual rent exceeds ₹1 lakh and your landlord refuses to provide PAN, you can still submit rent receipts with a signed declaration from the landlord stating that they don't have a PAN. However, your employer may not accept the HRA claim for TDS purposes without PAN. You can still claim the exemption when filing your ITR, though there's a risk of receiving a tax notice. It's best to document the landlord's refusal in writing.
How do I submit HRA documents to my employer?▼
At the beginning of the financial year, submit Form 12BB to your employer's payroll/HR team declaring your expected HRA exemption. This allows them to compute lower TDS. At year-end (typically February or March), submit actual rent receipts for the year. If you don't submit on time, the employer will deduct higher TDS — but you can still claim the exemption when filing your ITR and get a refund.
Can I claim HRA for accommodation in a paying guest (PG) or hostel?▼
Yes, HRA can be claimed for rent paid to a PG or hostel, provided you have a proper receipt and agreement. The PG owner or hostel management should provide signed rent receipts. The IT department may scrutinise PG claims, so maintain thorough documentation. If the PG owner refuses to give receipts, it's harder to sustain the claim.
What happens if I work from home and my HRA is questioned?▼
If you're fully working from home and your employer's office is in a different city, you can still claim HRA for the city where you actually reside and pay rent — your residence city is what matters, not your employer's office city. However, if you own the house you're working from, no HRA exemption is available for that property even if you have a home loan on it.
Does DA (Dearness Allowance) always get added to basic for HRA?▼
DA is added to Basic for HRA calculation only if DA forms part of the salary for retirement benefit calculation (i.e., if DA is considered for PF/gratuity purposes). For most private sector employees, DA is either zero or not linked to retirement benefits — in which case, only the Basic Salary is used in the HRA formula. For central and state government employees, DA is typically part of retirement benefits and hence included.
