How HRA Exemption Is Calculated
If you live in rented accommodation and receive House Rent Allowance (HRA), part of it is exempt from income tax under Section 10(13A). The exempt amount is the least of these three:
- The actual HRA received from your employer
- 50% of basic salary (metro cities) or 40% (non-metro cities)
- Rent paid − 10% of basic salary
Exempt HRA = min( Actual HRA, 50%/40% of Basic, Rent − 10% of Basic )
Metro vs Non-Metro Cities
For HRA, the metro cities are Delhi, Mumbai, Kolkata and Chennai (50% of basic). Every other city is treated as non-metro (40% of basic).
Important: Old Regime Only
HRA exemption is available only under the old tax regime. If you choose the new regime, your entire HRA is taxable. Compare both with our income tax calculator.
Frequently Asked Questions
What documents do I need to claim HRA?
Rent receipts, and the landlord's PAN if your annual rent exceeds ₹1,00,000. Paying rent by bank transfer creates a clear record.
Can I claim both HRA and a home loan?
Yes, in certain cases — for example if you rent in one city and own a home (with a loan) in another, or your owned home is genuinely not usable as your residence.