HRA Exemption Calculator India
Calculate how much House Rent Allowance may be exempt and how much remains taxable using the current Tax Year 2026–27 three-limit method.
How to Use the HRA Exemption Calculator
Select Monthly if you are entering one month's Basic salary, DA, HRA and rent. Select Annual if your figures already represent the full relevant period. Enter only the DA that forms part of salary for the HRA calculation, then choose the location of the rented residential accommodation. The calculator annualises monthly figures so equivalent monthly and annual inputs produce the same annual exemption.
The result shows HRA Exempt first and Taxable HRA second. It also displays the three limits that were compared, because the HRA received itself is not automatically the amount exempt from tax.
How HRA Exemption Is Calculated
For Tax Year 2026–27, Rule 279 uses a least-of-three test. The relevant exemption is the lowest of the HRA actually received, the amount by which rent paid exceeds 10% of salary, and the applicable percentage of salary based on the location of the rented accommodation.
The comparison bars in the result card are deliberately simple. Their purpose is to show which amount is controlling the exemption, not to create a decorative chart. The shortest highlighted bar represents the lowest applicable amount.
The Three HRA Exemption Limits
1. Actual HRA received
This is the House Rent Allowance actually received from the employer for the relevant period. If HRA received is zero, the exemption is zero even when rent is being paid.
2. Rent paid minus 10% of salary
The second limit is actual rent paid minus 10% of the salary base. When the calculation is negative, this calculator uses zero. For example, if annual salary is ₹6,00,000 and annual rent is only ₹50,000, 10% of salary is ₹60,000. The raw difference is negative, so this limit becomes ₹0 and the HRA exemption becomes ₹0.
3. 50% or 40% of salary
The third limit depends on the location of the rented residential accommodation. The eight locations named in current Rule 279 use 50% of salary. Any other place uses 40%.
HRA Rules for Tax Year 2026–27
The current framework sits under the Income-tax Act, 2025 and Income-tax Rules, 2026. Rule 279 specifies the limits for the HRA item in Schedule III. This matters because older articles often describe HRA only through section 10(13A) and Rule 2A of the previous law. Those references remain useful historically, but the current calculator uses the 2026 framework.
Rule 279 also defines the relevant period as the period during which the accommodation was occupied during the tax year. That is why a single annual calculation can be misleading when salary, HRA, rent or location changed part-way through the year.
Which Cities Use the 50% Salary Limit?
For Tax Year 2026–27, Rule 279 lists Mumbai, Kolkata, Delhi, Chennai, Hyderabad, Pune, Ahmedabad and Bengaluru for the 50% salary limit. Rented accommodation in any other location uses 40%.
The location test refers to the rented residential accommodation. It does not use your company's registered office, your permanent address or your home town. If you work in Bengaluru but rent a home in another place, select the rented home's location.
Bengaluru, Hyderabad, Pune and Ahmedabad: What Changed?
Older HRA calculators and articles commonly use the familiar four-city grouping of Mumbai, Delhi, Kolkata and Chennai. Under the current 2026 rule, Bengaluru, Hyderabad, Pune and Ahmedabad are also included in the 50% list. That means using an old city table can understate the third HRA limit for employees renting in those four cities.
Gurugram and Noida are not in Rule 279's eight-city list, so this calculator treats them as Other City / Town and applies 40%, unless the official rule is changed in the future.
HRA Under the Old and New Tax Regimes
The default new-regime computation under section 202 is made without the Schedule III exemption that includes HRA. This calculator therefore calculates the HRA exemption for situations where the relevant exemption is available after opting out of that default treatment. It does not attempt to compare complete old- and new-regime tax liabilities.
The amount shown as HRA Exempt is also not the same thing as tax saved. Tax saving depends on your total taxable income, applicable regime, slab rate and other circumstances.
What Salary Is Used for HRA Calculation?
Rule 279 states that salary includes dearness allowance where it is provided for under the terms of employment, while excluding other allowances and perquisites. The calculator therefore uses Basic Salary plus the eligible DA you enter. It does not ask for CTC, gross salary or take-home salary because those amounts can contain items that are not part of the statutory HRA salary base.
If you are unsure whether a DA component qualifies, check your employment terms and payroll records. Entering every allowance from a payslip as DA would overstate the salary base.
Monthly vs Annual HRA Calculation
Monthly mode is a convenience for stable salary and rent. It multiplies each entered figure by 12 before applying the annual comparison. Annual mode uses the entered figures directly. ₹50,000 Basic, ₹20,000 HRA and ₹18,000 rent in monthly mode therefore produce the same result as ₹6,00,000 Basic, ₹2,40,000 HRA and ₹2,16,000 rent in annual mode for the same location.
HRA Calculation Example
Suppose Basic salary is ₹50,000 per month, DA is ₹0, HRA received is ₹20,000 per month, rent is ₹18,000 per month and the rented home is in Bengaluru.
Annual salary base is ₹6,00,000. Actual HRA is ₹2,40,000. Rent minus 10% of salary is ₹2,16,000 − ₹60,000 = ₹1,56,000. Bengaluru uses 50%, so the third limit is ₹3,00,000. The lowest value is ₹1,56,000. HRA Exempt is therefore ₹1,56,000 and Taxable HRA is ₹84,000.
What If Rent Is Less Than 10% of Salary?
The rent-based limit cannot create a negative exemption. When rent is less than 10% of salary, this calculator sets that limit to zero. Since the exemption is the least of the three limits, the available HRA exemption becomes zero.
What If No Rent Is Paid?
If rent paid is ₹0, no HRA exemption is available from this calculation. The full HRA received remains taxable. Zero rent is treated as a valid input rather than an error because it is a real scenario the calculator must handle.
What If Salary or Rent Changes During the Year?
If your Basic salary, eligible DA, HRA, rent or rented-house location changes during the year, calculate each relevant period separately and add the eligible exemptions. This follows the rule's relevant-period approach and is more accurate than combining unlike periods into one average. The main calculator intentionally does not add twelve monthly rows because that would turn a simple HRA tool into payroll software.
Landlord PAN and Rent Documentation
This calculator does not collect landlord PAN, Aadhaar, name, address or rent-agreement information. Documentation requirements belong to payroll and tax-compliance processes, not to the mathematical exemption formula. Keep rent receipts, the rental agreement and other evidence required for your circumstances, and follow current employer and Income Tax Department guidance when making a claim.
Common HRA Calculation Mistakes
- Entering CTC or gross salary instead of the correct salary base.
- Assuming HRA received is automatically fully exempt.
- Using only the city percentage and ignoring the other two limits.
- Using the older four-city list for a current 2026 calculation.
- Selecting the office city instead of the location of the rented home.
- Claiming an exemption where no rent is actually paid.
- Allowing rent minus 10% of salary to become a negative exemption.
- Applying one annual calculation even though salary, rent or city changed during the year.
Frequently Asked Questions
How is HRA exemption calculated?
The exemption is the lowest of actual HRA received, rent paid minus 10% of salary, and 50% or 40% of salary depending on the rented-home location.
Is HRA exemption available under the new tax regime?
Section 202's default new-regime computation excludes the relevant Schedule III HRA exemption. This calculator is for cases where the exemption is available after opting out of that treatment.
Which cities qualify for the 50% salary limit?
Mumbai, Kolkata, Delhi, Chennai, Hyderabad, Pune, Ahmedabad and Bengaluru use 50% under current Rule 279. Other places use 40%.
Is Bengaluru eligible for the 50% HRA limit?
Yes. Bengaluru is expressly included in Rule 279's current eight-location 50% list.
Are Gurugram and Noida in the 50% list?
No. They are not included in the current eight-location list in Rule 279, so the calculator applies the 40% limit.
Is HRA calculated on Basic salary or gross salary?
The calculator uses Basic salary plus qualifying DA rather than gross salary or CTC, following Rule 279's salary definition.
What if rent is less than 10% of salary?
The rent-based limit is floored at zero. A negative value is never used as an HRA exemption.
Can I claim HRA without paying rent?
This calculation gives no HRA exemption when rent paid is zero. Actual eligibility and documentation should follow the applicable tax rules and evidence of rent payment.
What if my salary or rent changes during the year?
Calculate each relevant period separately using the figures and rented-home location that applied during that period, then add the eligible exemptions.
Are my salary and rent details stored?
No. This implementation calculates locally in your browser and does not place the entered values in URL parameters, local storage or session storage.
Official Sources & Methodology
CentralPortal.in provides an HRA estimate using the information entered and current published tax rules. Your employer's payroll records, Form 16 and official Income Tax Department guidance remain authoritative.