HRA Calculator

How to use the HRA calculator

Enter your monthly basic salary, any dearness allowance that counts for retirement benefits, the House Rent Allowance shown on your payslip, the rent you actually pay and the city you live in. Choose the financial year: from FY 2026-27 eight cities count as metros. The calculator works out the three limits in the HRA rule, picks the lowest as your tax-free HRA, and shows the taxable balance and approximate tax saved.

HRA exemption formula

The exempt part of HRA is the lowest of three amounts, calculated for the period you rented:

Here "salary" means basic pay plus dearness allowance that forms part of retirement benefits, plus any commission fixed as a percentage of turnover — not your gross pay. The 50% limit applies to metro cities and 40% to all others.

What changed from FY 2026-27

The Income-tax Act 2025 replaced the 1961 Act from 1 April 2026, and the HRA exemption moved from Section 10(13A) to Section 11 (read with Schedule III) of the new Act and the Income-tax Rules 2026. Two changes matter:

• Eight metro cities. Bengaluru, Hyderabad, Pune and Ahmedabad joined Mumbai, Delhi, Kolkata and Chennai in the 50% category. Employees in these four cities can now claim a larger exemption.
• Landlord relationship disclosure. When claiming HRA you must now also disclose your relationship with the landlord (for example, a parent), in addition to the landlord's PAN where annual rent exceeds ₹1 lakh.

The three-limit formula itself is unchanged.

Worked example

You live in Bengaluru with a basic salary of ₹50,000 a month, HRA of ₹20,000 and rent of ₹20,000. Yearly, salary is ₹6,00,000. The three limits are: actual HRA ₹2,40,000; rent minus 10% of salary = ₹2,40,000 − ₹60,000 = ₹1,80,000; and 50% of salary = ₹3,00,000. The exemption is the lowest, ₹1,80,000, and ₹60,000 of HRA is taxable.

The metro change matters when the salary limit is the binding one. Take a basic of ₹40,000, HRA of ₹20,000 and rent of ₹25,000 in Pune. In FY 2025-26, Pune was non-metro and the 40% limit (₹1,92,000) applied. In FY 2026-27, the 50% limit allows the full ₹2,40,000 — ₹48,000 more tax-free, worth about ₹15,000 in tax in the 30% slab.

Tips and common questions

• Old regime only. The new regime does not allow the HRA exemption. If HRA is your biggest benefit, check which regime is better with the income tax calculator.
• Paying rent to parents is allowed if they own the house, receive the money genuinely (bank transfer is best) and declare it as income. You cannot pay rent to your spouse.
• Own a house elsewhere? You can still claim HRA for the rented home in your work city, and claim home loan benefits on the other property — see the home loan EMI calculator.
• No HRA in salary? Self-employed people and employees without HRA can claim a smaller deduction for rent under Section 80GG (old regime).
• Missed the employer deadline? You can still claim HRA when filing your return if you have rent receipts and an agreement.

This calculator gives an estimate for salaried individuals and is not tax advice. Keep rent receipts and the rental agreement as proof.