HRA exemption can save you ₹30,000-1,50,000 in taxes every year. Calculate exactly how much of your HRA is tax-free based on your rent, salary, and city.
Exemption = Minimum of these three rules:
Last updated: April 08, 2026
If you are a salaried employee living in rented accommodation, you can claim HRA exemption under Section 10(13A) of the Income Tax Act. This exemption is available only under the old tax regime — the new tax regime does not allow HRA exemption.
The exemption amount is the lowest of these three:
1. Actual HRA received from your employer
2. Rent paid minus 10% of (Basic Salary + DA)
3. 50% of (Basic + DA) if you live in a metro city (Delhi, Mumbai, Chennai, Kolkata), or 40% if you live in a non-metro city
Suppose your monthly basic salary is ₹40,000, DA is zero, HRA received is ₹16,000, and you pay ₹15,000 rent in Mumbai (metro city).
Rule 1: ₹16,000 × 12 = ₹1,92,000
Rule 2: (₹15,000 − ₹4,000) × 12 = ₹1,32,000
Rule 3: 50% × ₹40,000 × 12 = ₹2,40,000
Minimum = ₹1,32,000. This is your annual HRA exemption. In the 30% tax bracket, this saves you approximately ₹40,000 in taxes.
You cannot claim HRA exemption if you own the house you live in (no rent paid), if you live with parents and do not pay them rent, or if you have chosen the new tax regime. However, a common and legal strategy is to pay rent to your parents (if they own the house) and claim HRA — as long as your parents declare this rent as income in their tax return.
Related: Income Tax Calculator | Salary Calculator | Old vs New Tax Regime