INR 144,000.00
(Basic Salary + DA)
INR 192,000.00
(Basic Salary + DA)
INR 252,000.00
INR 144,000.00
INR 0.00
Note 1: As per our calculations, your optimal rent for maximum HRA tax-exemption benefit is INR 192,000.00
Note 2: If an employee is paying rental expenses but does not receive HRA or a person is paying rental expenses but does not have a salary, they can still claim up to ₹60,000 deduction under Section 80GG.
Disclaimer: Kindly note that this tool is only for informational purpose. Please contact a certified tax-advisor if you need assistance with ITR filing, tax payments, or just better tax planning.
What is HRA - House Rent Allowance?
House Rent Allowance (HRA) is an important component of the salary-structure for employees in India. It is an allowance paid to cover the home rental expenses of the employee. However, it is paid regardless of whether an employee rents a house or not.
The percentage of HRA component in salary can vary from one company to another depending on factors such as total salary, salary structure, and city of work (metro city or non-metro city).
Salaried individuals who live in a rented house can additionally claim tax exemption on the HRA component to bring down their total tax burden.
HRA can be fully or partially exempted from the tax based on a set of calculations that our easy HRA calculator assists you with. Note that for employees who get HRA component in their salary but are not paying any rent, this component is fully taxable.
Who is eligible for HRA Tax exemption?
As per the rules for Income tax, an employee of a company who is receiving HRA and is paying rental expense is eligible for HRA tax exemption.
How much of HRA is exempt from tax?
For salaried individuals receiving HRA component, the HRA amount on which tax exemption can be claimed is calculated as the minimum of below three:
Total HRA received from employer.
Actual rent paid minus 10% of (basic salary + dearness allowance).
50% of (basic salary + dearness allowance) for those living in metro cities or 40% of (basic salary + dearness allowance) for those living in non-metro cities.
The non-exempted HRA is added back to the taxable salary. You can simply input these values in our HRA calculator and let it calculate HRA exemption amount.
Let us understand this with an example by considering the following scenario:
Mr. X stays in a rented flat in the Mumbai city of India. His basic salary is INR 40,000 and he receives an HRA of INR 12,000 per month in his current job.
Let us assume Mr. X pays a monthly rent of INR 25,000 for the flat he stays in. Considering all provided data, let us do some calculations in the below table to figure out the tax-exempt part of HRA for Mr. X
| Sl. No. | Head | Calculation | Amount in INR |
|---|---|---|---|
| 1 | Actual HRA received | = 12000 * 12 | 1,44,000 |
| 2 | Actual Rent Paid – 10% of basic salary | = 25000 * 12 – 40000 * 12 * 10% | 2,52,000 |
| 3 | 50% of basic salary for metro city | = 40000 * 12 * 50% | 2,40,000 |
| HRA – tax exempt (least of above): | 1,44,000 | ||
The minimum value as per above calculations is INR 1,44,000 and thus Mr. X can claim an exemption of INR 1 lakh 44 thousand while filing his tax.
What are the HRA exemption rules for self-employed individuals and those who do not receive HRA in salary?
Self-employed individuals and individuals who do not receive HRA component in their salary could claim the tax deduction on HRA under Section 80GG of the Income Tax Act, 1961. However, they (including spouse and minor children) should not own residential property in the same location or receive HRA from an employer to claim the tax deduction.
Below are the HRA exemption rules for such individuals in India:
The HRA tax deduction amount must be lower of the below:
INR 5,000 per month or
25% of the Adjusted Total Income or
Actual Rent Paid minus 10% of Adjusted Total Income
To claim 80GG deductions, you must submit Form 10BA for self-declaration along with your income tax returns (ITR), rent receipts, and your rental agreement.
What is an HRA calculator?
HRA calculator is an easy-to-use free online calculator that helps to quickly calculate the tax-exempt portion of HRA. The calculator does it all so that you don’t have to get into complex calculations and remember the formula/clauses.
How to use our HRA calculator?
You can easily calculate the tax exemption on HRA by using our free HRA calculator. You need to provide the below inputs to our calculator:
Calculation Mode: By default, the calculation mode is set to Yearly, however, you can change the calculation mode to Monthly if you want to provide the monthly input for below fields.
Basic Salary Received: This is the Total basic salary received for the financial year or month (in case of monthly calculation mode).
Dearness Allowance (DA) Received: Dearness allowance is the sum paid to employee as compensation against the effects of inflation. Generally, if applicable this is the second line item on the salary slip. Enter the Total dearness allowance (DA) received during the financial year or month (in case of monthly calculation mode).
HRA Received: Total HRA received in the financial year or month (in case of monthly calculation mode).
Total Rent Paid: Total rent paid during the financial year or month (in case of monthly calculation mode).
Do you live in Delhi, Mumbai, Kolkata, Chennai?: Select the appropriate option (Yes or No) depending on the location of rented property for which you are claiming HRA exemption.
Once all the required values and selections are set, you can simply hit the submit button for a quick calculation. Voila! You should now have the tax-exempted and non-exempted components of HRA in front of you along with an overview of the calculations performed.
How can an easy HRA calculator benefit you?
Below are some of the benefits of using our online HRA calculator:
Easy to use: It is a simple and straightforward calculator that gives you exactly what you want with minimal inputs required.
Free to use: This calculator is 100% free, we do not charge our users for the usage.
Timesaving: We completely understand that the tax calculation is important and any exemption from paying taxes is rewarding. We strive to make the complex art of tax-filing a little easier and less time consuming with this simple HRA calculator.
Accurate/No errors: We make sure the calculator is always up to date with the rules of income tax. These rules can vary from one financial budget to another, and we don’t want our users to worry about the applicable taxation rules. Also, all our calculations are 100% accurate, helping you avoid compliance issues caused by incorrect tax-filing.
Scenario Analysis for efficient tax planning: Try inputting different values and playing around a little bit to find out how you can improve the exempted tax component. In any case, we will show the maximum amount that can be exempted for you.
Calculating HRA without a trusted online calculator can involve a lot of tedious calculations and possibly spreadsheets. However, using our calculator you can get these values as soon as you enter the required details. We hope you have a good experience with our online HRA calculator but do reach out and let us know about things we can further improve upon.
Other HRA FAQs:
Often, below documents need to be submitted to claim tax exemption on HRA:
Your PAN card.
Rent receipts for the financial year.
Copy of landlords PAN card, if the total rent paid is above INR 1,00,000.
Copy of the rent agreement.
Form 10BA (self-declaration): Only applicable for self-employed and individuals not receiving HRA component in their salary.
Note that the rent receipts should clearly state the rent period, rent amount paid, property address, and should have postal stamp.
For salaried employees in India, the tax exemption on HRA is calculated as minimum of below three values:
Total HRA received from employer.
Actual rent paid minus 10% of (basic salary + dearness allowance).
50% of (basic salary + dearness allowance) for those living in metro cities or 40% of (basic salary + dearness allowance) for those living in non-metro cities.
For self-employed or salaried employees not receiving HRA component, the deduction limit under 80GG is calculated as minimum of below three values:
5000 per month.
25 % of Adjusted Total income.
Actual Rent Paid (-) 10% of Adjusted Total Income.
Note: To claim 80GG deductions, you must submit Form 10BA for self-declaration along with your income tax returns (ITR), rent receipts, and your rental agreement.
Not necessarily. The HRA component can be anywhere between 0 and 50% depending on factors such as total salary, salary structure, city of work, etc.
The house rent allowance cannot go beyond 50 percent of the basic salary.
The income tax exemption on HRA comes under Section 10(13A) read with Rule 2A of Income Tax Act, 1961 for salaried individuals receiving HRA component.
For individuals not receiving HRA component or self-employed, the claims come under section 80GG of Income Tax Act, 1961
In case the landlord is an NRI, a tenant needs to deduct 31.2% (30% Tax + 4% of 30% as Education Cess) TDS from the rent and pay as challan to the government.
The tenant should file TDS Returns Form 27Q with owner’s PAN number.
Note that irrespective of whether TDS is deducted or not, the total rent in the rent receipt or rental agreement should not change.
Similarly, the total rent declared for the calculation of HRA should not change as well.
As a tenant you need to deduct a TDS of 5% from the rent and pay as challan to the government.
Also, the tenant should file the TDS Returns Form 26QC with owner's PAN number.
When deducting TDS and paying the challan, the total rental value should not change for the rental agreement or HRA calculation or employer declaration etc.
Finally, some articles/references from around the web:
- Article: Planning Your Finances - Timeless Advice
- Reference: HRA Full Form