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HRA Exemption Calculator
Work out how much of your house rent allowance is exempt, and which of the three caps is holding it down.
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Result
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HRA exemption is the least of three numbers, which is why raising your rent sometimes increases the exemption and sometimes does nothing at all. Knowing which cap is binding tells you whether there is anything left to optimise.
The three caps
The exemption is the smallest of: the HRA actually in your salary, rent paid minus 10% of basic plus DA, and 50% of basic plus DA in Delhi, Mumbai, Kolkata or Chennai — 40% everywhere else. If the first cap binds, more rent changes nothing. If the second binds, every extra rupee of rent adds to the exemption until one of the others takes over.
Documentation
Rent above ₹1 lakh a year means your landlord's PAN goes on the declaration you give your employer. Rent receipts need the landlord's name, address and signature. Paying rent to a parent is allowed — the rent has to be real, transferred by bank, and declared in their return.
A word on the regime
HRA exemption exists only under the old regime. Under the new regime the whole allowance is taxable, which is usually the largest single item pushing a metro tenant towards the old regime.
Frequently asked questions
How is HRA exemption calculated?
It is the least of three amounts: the HRA actually received, rent paid minus 10% of basic plus DA, and 50% of basic plus DA in Delhi, Mumbai, Kolkata or Chennai (40% elsewhere). Whichever is smallest becomes the exempt figure, and the rest of your HRA is taxable.
Can I claim HRA if I pay rent to my parents?
Yes, provided the arrangement is genuine. Your parents must own the property, the rent should move by bank transfer, and they have to declare it as rental income in their own return. Paying rent to a spouse is routinely challenged and is best avoided.
Do I need my landlord's PAN?
Only where annual rent exceeds ₹1,00,000. Below that, rent receipts with the landlord's name, address and signature are enough. If the landlord refuses to share a PAN, you can file a declaration, but employers increasingly decline the claim without it.
Can I claim HRA under the new tax regime?
No. HRA exemption is available only under the old regime. Under the new regime the whole allowance is taxable, which for a metro tenant is often the single largest reason the old regime still works out cheaper.
Can I claim both HRA and a home loan deduction?
Yes, if the facts support it — for example, you own a house in one city on a loan and genuinely rent in another for work. Claiming both for the same city invites scrutiny and needs a clear explanation such as distance from your workplace.