What is a HRA Exemption Calculator?
House rent allowance is only partly exempt from tax, and the exempt portion is the smallest of three separate figures. Most calculators hand you one number; the useful part is knowing which of the three is doing the capping.
Enter your yearly basic plus dearness allowance, the HRA you receive and the rent you pay, and say whether you live in a metro. The tool shows all three figures, the exemption and the taxable remainder.
Knowing the binding rule tells you what would actually change the answer. If rent minus ten percent of basic is the smallest, paying more rent raises the exemption. If the metro percentage is the smallest, it will not, because that figure is fixed by your basic salary no matter what you pay your landlord.
Frequently asked questions
How is HRA exemption calculated?
It is the least of three amounts: the HRA actually received, the rent paid minus ten percent of basic salary, and fifty percent of basic for metro cities or forty percent elsewhere. The smallest of the three is exempt and the rest of your HRA is taxable.
Which cities count as metro for HRA?
Delhi, Mumbai, Kolkata and Chennai only. Bengaluru, Hyderabad, Pune and every other city take the forty percent figure, which surprises people who assume any large city qualifies.
Can I claim HRA under the new tax regime?
No. The HRA exemption is available under the old regime only. If you are on the new regime this calculation does not apply to you.
Do I need the landlord’s PAN?
If your rent exceeds one lakh in the financial year, employers generally require the landlord’s PAN to allow the exemption through payroll.