Finance & Calculators 2 min read
How to Calculate HRA Exemption: Formula, Example and Rent Receipts
Learn the least-of-three HRA formula, see a worked example, and know which documents you need to claim HRA.
House Rent Allowance (HRA) is part of your salary. If you live in rented housing, a part of it can be tax-free in the old tax regime. The exempt amount is the lowest of three numbers.
The HRA formula
- The HRA you actually receive from your employer.
- Your rent paid minus 10% of your salary (basic + DA).
- 50% of your salary if you live in a metro city, or 40% if you do not.
Whatever part of your HRA is more than this lowest figure is added to your taxable income.
Worked example
Say you live in Bengaluru in FY 2026-27. Basic salary is ₹50,000 a month, HRA is ₹25,000 and rent is ₹22,000. For 12 months:
- HRA received: ₹3,00,000
- Rent − 10% of salary: ₹2,64,000 − ₹60,000 = ₹2,04,000
- 50% of salary: ₹3,00,000
The lowest is ₹2,04,000, so that is your HRA exemption. The remaining ₹96,000 of HRA is taxable.
HRA Calculator
Calculate your HRA exemption in seconds.
What counts as "salary"
For HRA, salary means basic pay plus dearness allowance (DA), plus any commission fixed as a percentage of turnover. Special allowances, bonuses and other pay are not included.
Documents you need
- Rent receipts for the months you paid rent. Make them with the Rent Receipt Generator.
- The landlord’s PAN if your yearly rent is above ₹1,00,000.
- A rent agreement, if you have one, and bank or UPI proof of payment.
Frequently asked questions
Can I claim HRA if I live with my parents?
You can if you really pay them rent and they report it as income. Keep proof of payment and rent receipts, and check the rules for your case with a tax professional.
Can I claim HRA and home loan interest together?
In some cases yes, such as when you live in a rented house in one city and own a house in another. The rules are detailed, so ask a tax professional.
Is the HRA exemption monthly or yearly?
It is worked out for the whole year, but you can also do it for each month. The result is the same if your pay and rent do not change.
