HRA Exemption Calculator — Maximize Your Tax Savings on Rent — India 2026
Calculate HRA exemption amount under Section 10(13A) of Income Tax Act. Find out how much of your House Rent Allowance is tax-free for FY 2025-26.
If you are a salaried employee living in a rented accommodation HRA exemption can significantly reduce your tax liability. The exemption amount is the minimum of three values: actual HRA received or 50% of basic salary for metro cities (40% for non-metro) or actual rent paid minus 10% of basic salary. Many employees miss this benefit because they do not understand the calculation. Use our calculator to find exactly how much tax you can save.
How is HRA exemption calculated?
HRA exemption is the minimum of these three amounts: (1) Actual HRA received from employer (2) 50% of basic salary if you live in Delhi Mumbai Chennai or Kolkata or 40% for other cities (3) Actual rent paid minus 10% of basic salary. For example if basic is Rs 40000 HRA is Rs 20000 and rent is Rs 15000 in Mumbai the exemption is minimum of Rs 20000 or Rs 20000 or Rs 11000 = Rs 11000 per month.
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HRA Exemption Calculator
How Tax Calculation Works
Income tax is calculated on your total taxable income after deducting eligible exemptions and deductions from your gross income. The tax is applied progressively — you pay a lower rate on initial income slabs and higher rates only on income that exceeds each threshold. This means moving into a "higher tax bracket" does not mean your entire income is taxed at the higher rate. Understanding marginal vs effective tax rate is crucial: your marginal rate applies only to the last rupee earned, while your effective rate is the average across all slabs.
Tax-Saving Strategies
Under the old regime, maximize deductions: Section 80C allows up to Rs 1.5 lakh through PPF, ELSS, EPF, and life insurance. Section 80D covers health insurance premiums up to Rs 25,000 (Rs 50,000 for senior citizens). Section 80CCD(1B) offers an additional Rs 50,000 deduction for NPS contributions. Home loan interest up to Rs 2 lakh is deductible under Section 24. Under the new regime, the Rs 75,000 standard deduction and lower slab rates may save you more if your total deductions are below Rs 3.75 lakh. Calculate under both regimes before choosing.
Key Information
| Parameter | Details |
|---|---|
| Metro City Rate | 50% of Basic Salary |
| Non-Metro Rate | 40% of Basic Salary |
| Rent Deduction | Rent Paid - 10% of Basic |
| Eligible Employees | Salaried receiving HRA component |
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Use Calculator NowFrequently Asked Questions
How is HRA exemption calculated?
HRA exemption is the minimum of these three amounts: (1) Actual HRA received from employer (2) 50% of basic salary if you live in Delhi Mumbai Chennai or Kolkata or 40% for other cities (3) Actual rent paid minus 10% of basic salary. For example if basic is Rs 40000 HRA is Rs 20000 and rent is Rs 15000 in Mumbai the exemption is minimum of Rs 20000 or Rs 20000 or Rs 11000 = Rs 11000 per month.
Can I claim HRA if I have a home loan?
Yes you can claim both HRA exemption and home loan tax benefits simultaneously if you live in a rented house and also have a property financed through a home loan. This is legally valid when the rented and owned properties are in different cities or when you have genuine reasons for not living in the owned property.
Do I need rent receipts for HRA claim?
Yes rent receipts are mandatory for claiming HRA exemption if rent exceeds Rs 3000 per month. For rent above Rs 1 lakh per month you must also provide the landlord PAN number. If the landlord does not have a PAN a declaration to that effect is required. Keep all receipts safely as your employer or IT department may request them.
Which tax regime should I choose — old or new?
Choose the new regime if your total deductions are below Rs 3.75 lakh. Choose the old regime if you claim HRA, 80C (Rs 1.5L), 80D, home loan interest, and NPS totaling more than Rs 3.75 lakh. Salaried employees can switch every year.
Is income up to Rs 12 lakh really tax-free?
Under the new regime for FY 2025-26, income up to Rs 12 lakh is effectively tax-free due to Section 87A rebate. After Rs 75,000 standard deduction, taxable income is Rs 11.25 lakh which qualifies for full rebate. However, income even slightly above Rs 12 lakh loses this entire benefit.
How can I save more tax legally?
Under the old regime, maximize 80C (Rs 1.5L via PPF, ELSS, EPF), 80D (Rs 25K-50K for health insurance), 80CCD(1B) (Rs 50K for NPS), HRA exemption, and home loan interest (Rs 2L under Section 24).
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Last updated: March 2026