HRA Calculator - Calculate House Rent Allowance Exemption
Calculate HRA exemption and tax savings on house rent allowance. Know your eligible tax benefits on rental accommodation.
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Understanding HRA Tax Exemption under Section 10(13A) (FY 2026-27)
House Rent Allowance (HRA) is a standard component of salaried compensation packages across India designed to subsidize the cost of rented accommodation. Under Section 10(13A) read with Rule 2A of the Income Tax Act, 1961, salaried employees living in rented accommodation can claim substantial tax exemptions on the HRA received from their employer, reducing their taxable gross salary.
Under Indian income tax law, the tax-exempt portion of HRA is mathematically determined as the least of three statutory limits:
- Actual HRA Received: The total House Rent Allowance disbursed by your employer as indicated on your monthly payslip.
- Salary Percentage by City: 50% of (Basic Salary + Dearness Allowance) if you reside in the four designated metro cities (New Delhi, Mumbai, Kolkata, Chennai), or 40% of (Basic Salary + DA) for all non-metro cities (including major IT hubs such as Bengaluru, Hyderabad, Pune, and Gurugram).
- Excess Rent Paid: Total rent paid minus 10% of (Basic Salary + Dearness Allowance).
The remaining portion (Total HRA Received minus Exemption) is added to your gross total income and taxed at your applicable slab rate under the Old Tax Regime. (Note: HRA exemption under Section 10(13A) is not available under the default New Tax Regime under Section 115BAC).
Mandatory Compliance & Landlord PAN Rules
- Landlord PAN Threshold (₹1 Lakh/year): Under CBDT Circulars and Section 206AA, if your annual rent exceeds ₹1,00,000 (i.e., more than ₹8,333 per month), you are legally required to report the Landlord's PAN in Form 12BB to your employer. If the landlord does not have a PAN, a signed declaration along with Form 60 must be secured.
- Section 194-IB TDS (Rent > ₹50,000/month): If an individual or HUF tenant pays rent exceeding ₹50,000 per month, they must deduct 5% TDS under Section 194-IB from the rent payable in the last month of the financial year (or tenancy) and deposit it using Challan-cum-statement Form 26QC within 30 days. No TAN is required.
- Paying Rent to Parents: You can legally pay rent to your parents and claim Section 10(13A) HRA exemption provided parents own the property, an active registered rental agreement exists, monthly rent is transferred via banking channels, and parents declare the rental earnings in their Income Tax Return (ITR). Paying rent to a spouse is disallowed by Income Tax Appellate Tribunals (ITAT).
Frequently Asked Questions on HRA Exemption
How is HRA exemption calculated under Section 10(13A)?
HRA exemption is calculated as the minimum of: (1) Actual HRA received from your employer, (2) 50% of Basic Salary + DA for metro cities (Delhi, Mumbai, Kolkata, Chennai) or 40% for non-metros, and (3) Rent paid minus 10% of Basic Salary + DA.
Can I claim HRA exemption under the New Tax Regime?
No. Under the concessional New Tax Regime (Section 115BAC), Section 10(13A) HRA exemption is completely disallowed. To claim HRA tax exemption, you must opt for the Old Tax Regime when submitting your investment declaration or filing your ITR.
When is Landlord's PAN mandatory for claiming HRA?
According to CBDT regulations, submitting the landlord's Permanent Account Number (PAN) is mandatory if your total rent paid exceeds ₹1,00,000 per financial year (equivalent to more than ₹8,333 per month).
Can I pay rent to my parents and claim HRA tax exemption?
Yes, paying rent to your parents is completely legal if they are the registered legal owners of the residential property. You must execute a formal rent agreement, transfer rent via bank transfers, obtain signed rent receipts, and your parents must report this rental income in their annual ITR.
What is the Section 194-IB TDS rule for high-value rent?
If your monthly rent exceeds ₹50,000, you are legally obligated under Section 194-IB to deduct 5% TDS from the landlord's rent. The deducted tax must be remitted to the government using Form 26QC within 30 days of deduction, and Form 16C certificate must be issued to the landlord.