HRA Calculator

What is HRA?

HRA or House Rent Allowance, is an allowance that salaried individuals receive from their employer for meeting the rental expenses of their house. The amount received is partly exempted from tax for the employees who are residing in a rented house. In case the employee lives in his/her own house and does not pay any rent, the entire amount would be taxable

How is HRA calculated for tax saving?

*For above calculations, the salary would be taken as Basic Pay + D.A. (if considered for retirement benefits) + Commission. You can use our free HRA Calculator to calculate your exemption amount.

How Legaldev HRA Calculator Works?

Here are the steps to use the HRA Calculator -

• Select whether you are living in a ‘Metro City’ or ‘Other city’.
• Enter the amount of Basic Salary + DA + Commission Received
• Enter the actual amount of HRA you have received from your employer
• Enter the actual rent paid by you.
• Now fill in your email address and click ‘Submit’.
• The HRA calculator will automatically calculate the amount of HRA exemption that you can avail of.

To reduce your tax burden and save your hard-earned money from taxes, it is important to plan your investments (exemptions and deductions). Plan your Taxes Today.

Benefits of HRA Calculator

Quick: HRA calculators are very fast and effective. You don’t have to spend long time doing manual calculations. You can calculate HRA using HRA calculator in a matter of minutes. All you have to do is enter a few basic details about the HRA received and rent paid, and you can calculate your exemption.

Easy to Use: HRA calculators are extremely easy to use and understand. Even laymen with zero knowledge of taxes can easily compute their HRA exemption using an HRA calculator.

Accurate: HRA calculators do not make mistakes and are accurate. It considers all the rules and regulations to give you the most accurate results.

Documents Required for HRA Exemption claim

It depends on the amount of rent paid:

• If your monthly rent is less than Rs. 3,000- No rent receipts are required
• If your monthly rent is more than Rs. 3,000- Rent receipts are to be submitted. Click here to Generate Rent Receipts.
• If your monthly rent is more than Rs. 8,333, the PAN of the landlord is also required. If the landlord does not have a PAN, a declaration from the landlord is to be submitted. Read further details here.

Eligibility for HRA Exemption Claim

To claim House Rent Allowance (HRA) exemption in India, you need to meet the following eligibility criteria:

• Salaried Individual: You must be a salaried individual receiving HRA as part of your compensation package. Self-employed individuals or those not receiving HRA are not eligible for this exemption.
• Payment of Rent: You must pay rent for the residential accommodation you occupy. If you live in a house owned by you, HRA exemption does not apply.
• HRA Component: Your salary structure should include an HRA component. It's essential that your employer provides you with HRA, and this amount should be specified in your salary slip.
• Actual Rent Paid: You must be paying actual rent for your accommodation. The rent should be paid for the house you are currently residing in, and you should have documentary evidence of these payments.
• Location: The house for which you pay rent should be in a city, town, or area where HRA is applicable. HRA exemptions vary based on the location, with higher exemptions typically available in metropolitan cities.
• Not Owning a House in the Specified Location: You should not own a house in the city where you are claiming the HRA exemption. If you own a house in a different city and live in rented accommodation, you can claim the exemption for the rent paid.
• Part of Salary: HRA exemption is a part of your taxable salary, so you need to declare your HRA as income while filing your income tax return.
• Furnish Rent Receipts: To claim the exemption, you need to provide rent receipts or a rental agreement as evidence of rent payment to your employer. You should also have your landlord's PAN (Permanent Account Number) for rent payments exceeding Rs. 1 lakh per year.
• Exemption Calculation: The HRA exemption is calculated based on the least of the following:
  a. The actual HRA was received.
  b. Rent is paid minus 10% of your salary. c. 50% of your salary (if you live in a metro city) or 40% of your salary (if you live in a non-metro city).
• Submit Proof: You must submit your rent receipts and any other required documents to your employer to claim the HRA exemption.

What is the formula to calculate HRA?

The amount of HRA that can be availed as an exemption from the taxable salary is calculated using the following HRA calculation formula.

The least among the following can be claimed as an exemption or deduction:

• The actual amount of HRA received by the employee.
• 50% of the basic salary, if the employee resides in a metropolitan city.
• 40% of the basic salary, if the employee resides in a non-metropolitan city.
• Actual rent paid by the employee – 10% of basic salary

The least among the above is considered exempt from the taxable salary.
Here,
Basic salary = Basic salary + DA (Dearness allowance)

Example of how HRA Exemption is calculated

Let's assume you receive a monthly HRA of Rs. 20,000, and you live in a metro city. Your basic salary is Rs. 40,000 per month, and you pay a monthly rent of Rs. 15,000 for your accommodation.

To calculate your HRA exemption, you need to consider three scenarios and select the one with the least amount:

• Actual HRA Received: Rs. 20,000 per month.
• Rent Paid minus 10% of Salary: Rent paid (Rs. 15,000) minus 10% of your salary (10% of Rs. 40,000 = Rs. 4,000) = Rs. 11,000.
• 50% of Salary (since you live in a metro city): 50% of Rs. 40,000 = Rs. 20,000.

In this case, the least of these three scenarios is Rs. 11,000 (Rent Paid minus 10% of Salary). Therefore, your HRA exemption is Rs. 11,000 per month.

Your taxable HRA is the actual HRA received minus the exemption: Rs. 20,000 - Rs. 11,000 = Rs. 9,000 per month. This is the amount that will be added to your taxable income for the purpose of income tax calculation.