How the HRA exemption is calculated
House Rent Allowance exemption under Section 10(13A) of the Income Tax Act is the least of three amounts:
1. Actual HRA received from your employer
2. 50% of basic salary (metro) or 40% (non-metro)
3. Rent paid − 10% of basic salary (never below 0)The smallest of those three is the tax-free portion; anything left over is added back to your taxable income. The tool computes all three “legs” and highlights the winning (lowest) one so you can see exactly why your exemption landed where it did. All inputs are treated as monthly figures — multiply the exemption by 12 for the annual number on your return.
Worked example
Basic salary ₹50,000/month, HRA received ₹20,000, rent paid ₹18,000, living in a metro:
- Leg 1 — actual HRA: ₹20,000
- Leg 2 — 50% of basic: ₹25,000
- Leg 3 — rent − 10% of basic: ₹18,000 − ₹5,000 = ₹13,000
The least is ₹13,000, so ₹13,000 is exempt and the remaining ₹7,000 of HRA is taxable. Notice that simply receiving a large HRA doesn’t make it tax-free — Leg 3 ties the exemption to how much rent you actually pay relative to your basic.
Why the metro vs non-metro toggle matters
The four metro cities (Delhi, Mumbai, Kolkata, Chennai) use a 50%-of-basic ceiling in Leg 2; everywhere else uses 40%. For high earners whose Leg 2 is the binding constraint, that 10-point difference directly changes the exemption. The calculator switches the percentage automatically when you change the city type. Note that the HRA exemption only applies under the old tax regime — the new regime removes it, so factor that into your regime choice.
Privacy
Every figure is computed in your browser by the pure calculateHRA function. Your salary and rent never leave the page — no network requests, no localStorage, no analytics. You can verify this in your browser’s Network tab while editing the inputs.
Related calculators
Combine this with the income tax calculator to see your full liability, the salary calculator to break down your CTC, or the gratuity calculator for another Section-10 exemption.