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HRA Calculator 2025-26

Calculate your House Rent Allowance (HRA) tax exemption for FY 2025-26. Compare metro vs non-metro rates and maximize your tax savings on rental expenses.

Metro vs Non-MetroTax ExemptionRent CalculationTax Savings
₹
₹1L₹50L
₹
₹0₹5.00 L
₹
₹0₹5.00 L

Metro cities allow 50% of basic salary exemption, non-metro cities allow 40%

HRA Tax Exemption

₹1.32 L

Tax Savings: ₹39.60 K

Exempted Amount

₹1.32 L

Taxable HRA

₹1.08 L

HRA Exemption Calculation

Calculation Breakdown

HRA Received (Annual)₹2.40 L
50% of Basic Salary₹2.40 L
Rent Paid - 10% of Basic₹1.32 L
HRA Exemption (Minimum of above)₹1.32 L
Taxable HRA₹1.08 L

HRA Exemption Rules

HRA Exemption Rules

  • Exemption is minimum of three calculations
  • Metro cities: 50% of basic salary limit
  • Non-metro cities: 40% of basic salary limit
  • Rent minus 10% of basic salary

Important Notes

  • Rent receipts required for claims above ₹1 lakh
  • PAN of landlord needed for rent above ₹1 lakh/month
  • Only available in old tax regime
  • Cannot claim if you own house in same city

Tax Planning Tips

Optimization Tips

  • Negotiate higher basic salary component
  • Maintain proper rent receipts and agreements
  • Consider renting in metro cities for higher exemption
  • Pay rent equal to or more than 10% of basic

Documentation Required

  • Rent agreement copy
  • Monthly rent receipts
  • Landlord's PAN (if rent > ₹1L/month)
  • Bank statements showing rent payments

HRA Exemption Calculation Formula

Step 1: Actual HRA Received

The total HRA amount received from your employer during the financial year.

Monthly HRA × 12 months

Step 2: Percentage of Basic Salary

Maximum allowable exemption based on your city type and basic salary.

Metro: 50% of Basic
Non-Metro: 40% of Basic

Step 3: Rent Minus 10% Basic

Actual rent paid minus 10% of your basic salary for the year.

Annual Rent - (10% × Basic)

Final HRA Exemption

Minimum of the three amounts calculated above

Metro vs Non-Metro City Classification

Metro Cities (50% Exemption)

Delhi

National Capital Territory

Mumbai

Financial Capital of India

Kolkata

Cultural Capital of India

Chennai

Detroit of India

Non-Metro Cities (40% Exemption)

All cities except Delhi, Mumbai, Kolkata, and Chennai

Bangalore
Hyderabad
Pune
Ahmedabad
Jaipur
Lucknow
Kochi
Indore

And many more...

HRA Tax Planning Strategies

Optimize Salary Structure

  • • Negotiate higher basic salary component
  • • Ensure HRA is included in salary structure
  • • Balance basic vs allowances ratio
  • • Consider metro posting for higher exemption

Documentation Management

  • • Maintain proper rent receipts
  • • Get landlord's PAN for high rents
  • • Keep rental agreement updated
  • • Digital payment proof preferred

Strategic Planning

  • • Plan rent amount strategically
  • • Consider joint rental with spouse
  • • Time rental agreements properly
  • • Coordinate with other tax benefits

HRA Calculator FAQs

Everything you need to know about House Rent Allowance exemption, tax benefits, and rent receipt requirements

How is HRA exemption calculated?

HRA exemption is the minimum of three amounts: (1) Actual HRA received from employer, (2) 50% of basic salary for metro cities (40% for non-metro), (3) Actual rent paid minus 10% of basic salary. The lowest of these three is your HRA exemption.

Which cities are considered metro cities for HRA?

Delhi, Mumbai, Kolkata, and Chennai are considered metro cities for HRA calculation. For these cities, you can claim exemption up to 50% of basic salary. All other cities are considered non-metro with 40% exemption limit.

Can I claim HRA exemption if I own a house?

You cannot claim HRA exemption if you own a house in the same city where you work and live. However, if you own a house in a different city and pay rent in your work city, you can claim HRA exemption.

What documents are required for HRA exemption?

You need rent receipts, rental agreement copy, and landlord's PAN card (if annual rent exceeds ₹1 lakh). Bank statements showing rent payments may also be required as proof.

Is HRA exemption available in new tax regime?

No, HRA exemption is not available in the new tax regime. Only the old tax regime allows HRA exemption along with other deductions like Section 80C, 80D, etc.

Can both husband and wife claim HRA exemption?

Yes, both husband and wife can claim HRA exemption if both are working and receiving HRA from their respective employers. They can pay rent for the same house or different houses.

What if my HRA is more than 50% of basic salary in metro city?

Even if your employer pays HRA more than 50% (metro) or 40% (non-metro) of basic salary, your exemption is capped at these percentages. The excess HRA will be taxable as income.

Do I need to submit rent receipts every month?

Most employers require monthly rent receipts for amounts above ₹3,000 per month. For annual rent above ₹1 lakh, landlord's PAN is mandatory. Check with your employer's HR policy for specific requirements.

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