HRA Exemption Calculator
Tax Year 2026-27 · Schedule III Sl. 11Your details
Use this where the salary, the rent and the city stayed the same all year — the annual figures give the same answer as a month-by-month working. Where anything changed during the year, switch to month by month, because the exemption has to be computed for each period separately and the two methods then give different results.
Salary here means basic pay plus dearness allowance forming part of retirement benefits, plus commission calculated as a fixed percentage of turnover. Nothing else counts.
Use this when the rent, the salary or the city changed during the year. The exemption is worked out separately for each month and then added up, which is the correct method and usually differs from an annual calculation.
How the exemption is arrived at Least of the three tests
Reading of the position
What this HRA calculator does
House rent allowance is exempt under Sl. No. 11 of Schedule III to the Income-tax Act, 2025. This tool computes the exemption on the statutory basis, month by month where anything changed during the year, and shows what the exemption is actually worth to you in tax.
- The least of three tests — actual HRA received, rent paid less 10% of salary, and 50% or 40% of salary depending on the city
- Annual or month-by-month — annual figures where nothing changed, period-wise where the house, city, rent or salary changed mid-year
- Taxable HRA — the balance that remains chargeable under Salaries
- What share of the allowance escapes tax — shown as a percentage of the HRA received
- A printable statement — ready to hand to an employer with a rent receipt file
How house rent allowance exemption is calculated
The exemption is the least of these three amounts, and it is computed for the period during which the accommodation was actually occupied:
- The actual house rent allowance received for the period
- Rent actually paid, less 10% of salary for that period
- 50% of salary if the accommodation is in Delhi, Mumbai, Kolkata or Chennai; 40% of salary anywhere else
What counts as salary
Only basic pay, dearness allowance to the extent it forms part of retirement benefits, and commission computed as a fixed percentage of turnover. Bonus, overtime, other allowances and perquisites are all excluded, which is the single most common error in a self-computation.
When there is no exemption
Nothing is exempt if you do not actually pay rent, or if you live in accommodation you own. Paying rent to a spouse is not accepted. Rent paid to a parent is accepted where the arrangement is genuine, the parent owns the property and declares the rent as income.
The landlord's PAN
Where rent for the year exceeds ₹1,00,000, the landlord's permanent account number must be reported to the employer. Without it the employer will decline the exemption in Form 16, and claiming it later in the return invites a query.
Not available under the new regime
House rent allowance sits in the negative list under Section 202. If you are taxed under the default new regime the whole allowance is taxable, so this exemption is a reason to consider the option under Section 202(4) — but only if it outweighs the wider slabs and the larger rebate. Compare both regimes before deciding.
Disclaimer
This calculator gives an indicative computation of the exemption for house rent allowance from the figures you enter. The exemption actually allowed depends on rent genuinely paid and evidenced by receipts, on the landlord's permanent account number where the annual rent exceeds ₹1,00,000, and on the view your employer takes while issuing Form 16. It does not purport to give a correct computation in every circumstance. For filing a return, or for any other statutory use, the exact computation should be made under the provisions contained in the relevant Acts, Rules and notifications, and a professional should be consulted before any final decision is taken. No liability is accepted for any action taken on the basis of this output.