In plain language
House Rent Allowance (HRA) is partly exempt if you actually pay rent. The exempt amount is the least of these three:
- The actual HRA received;
- Rent paid minus 10% of salary (salary = basic + dearness allowance);
- 50% of salary if you live in a metro (Delhi, Mumbai, Kolkata, Chennai), or 40% for non-metro cities.
Whatever is left of your HRA after the exemption is taxable. You must genuinely pay rent, and documentation (rent receipts / landlord PAN where required) may be needed.
Note: HRA exemption is available under the applicable provisions/allowance rules; our team will confirm eligibility for your regime and facts.
💡 Example
Example: Basic+DA ₹50,000/mo, HRA ₹20,000/mo, rent ₹18,000/mo, metro. Least of: (1) ₹20,000; (2) ₹18,000 − ₹5,000 = ₹13,000; (3) 50% × ₹50,000 = ₹25,000. Exempt HRA = ₹13,000/month; the remaining ₹7,000 is taxable.
🧮 HRA Exemption Calculator
Exempt HRA is the least of: (1) actual HRA received, (2) rent paid − 10% of salary, (3) 50% of salary (metro) or 40% (non-metro). "Salary" = basic + DA. Enter monthly figures.
Monthly HRA exempt · least of the three
₹0
Indicative only. HRA exemption applies where you actually pay rent and receive HRA; conditions and documentation apply. Confirm with our team.
C
CA Rajat Agrawal
Chartered Accountant, EaseValue · Reviewed 03 Jul 2026
This explainer is prepared and reviewed by EaseValue's tax team, based on the text of the Income-tax Act, 2025 (as amended by the Finance Act, 2026).
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