Section 10(13A)

HRA Exemption Calculator

House Rent Allowance is exempt only up to the LEAST of three amounts. Most people assume it is whichever HRA their payslip shows — it usually is not, and the third test is what caps it.

HRA exempt from tax₹2,04,000per year
HRA that stays taxable₹96,000per year

The three tests (annual) — the lowest one wins

1. Actual HRA received₹3,00,000
2. 50% of Basic + DA₹3,00,000
3. Rent paid − 10% of Basic + DA(lowest — this is your exemption)₹2,04,000
Exemption allowed₹2,04,000

How it is calculated

Under Section 10(13A), House Rent Allowance is exempt only up to the least of three amounts:

  1. the actual HRA you received;
  2. 50% of Basic + DA if you live in Delhi, Mumbai, Kolkata or Chennai — 40% anywhere else;
  3. the rent you actually paid, minus 10% of Basic + DA.

The third test is what usually caps the exemption, and it is the one people forget. If your rent is modest relative to your Basic, the exemption shrinks however large the HRA on your payslip is. Pay no rent at all and the exemption is nil.

This applies only under the old tax regime. The new regime removes the HRA exemption entirely, which is one of the main reasons the old regime can still be the better choice for someone paying substantial rent.

Rent above ₹1,00,000 in a financial year requires your landlord's PAN. Rent paid to parents is allowed if the arrangement is genuine — they own the property, you actually pay, and they declare it as income.

Frequently asked questions

How is HRA exemption calculated?
It is the least of three amounts: the actual HRA received; 50% of Basic + DA if you live in a metro or 40% if you do not; and rent actually paid minus 10% of Basic + DA.
Which cities count as metro for HRA?
Only Delhi, Mumbai, Kolkata and Chennai. Every other city, including Bengaluru, Hyderabad and Pune, uses the 40% test.
Can I claim HRA under the new tax regime?
No. The HRA exemption is not available under the new regime. It is one of the main reasons the old regime can still work out better for someone paying substantial rent.
Do I need my landlord's PAN?
Yes, if the rent you pay exceeds ₹1,00,000 in a financial year. Below that, rent receipts are usually sufficient.
Can I claim HRA if I pay rent to my parents?
Yes, provided the arrangement is genuine — your parents own the property, you actually pay the rent, and they declare it as income. You cannot claim it for a property you own yourself.
What if I get no HRA in my salary?
Then Section 10(13A) does not apply. Salaried people without HRA may be able to claim a deduction under Section 80GG instead, subject to its own limits.

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