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SALARY & TAX TOOLS
HRA Exemption Calculator India FY 2025-26
Calculate exactly how much of your HRA is tax-free under the old tax regime. Metro vs non-metro rules applied.
HRA Exemption
₹2,40,000
This amount is tax-free
Exemption Calculation
Tax Saving Estimate
HRA Exemption Formula
Exempt HRA = min of: (A) Actual HRA received, (B) 50%/40% of basic (metro/non-metro), (C) Rent paid − 10% of basic. Example: Basic ₹6L, HRA ₹3L, Rent ₹25K/month (₹3L/year), non-metro. A=₹3L, B=₹2.4L, C=₹3L−₹60K=₹2.4L. Exemption = ₹2.4L.
Bangalore, Hyderabad, Pune are Non-Metro
Despite high real estate costs, Bangalore, Hyderabad, Pune, and Ahmedabad are classified as non-metro cities for HRA purposes. Only Mumbai, Delhi, Kolkata, and Chennai get the 50% metro rate. This is a common misconception that causes people to miscalculate their HRA exemption.
HRA and New vs Old Regime Decision
If you pay rent of ₹20,000–₹30,000/month in a non-metro city and have basic salary of ₹5–8L/year, your HRA exemption could be ₹1.5–2.5L/year. This alone can tip the balance in favour of the Old Regime versus New Regime.
Tax Saving from HRA
Tax saved from HRA = HRA exemption × your marginal tax rate. At 30% slab: exemption of ₹2.4L saves ₹74,880/year in tax (including 4% cess). At 20% slab: same exemption saves ₹49,920/year. This is a significant benefit only under the Old Regime.
A LITTLE MORE CLARITY
Frequently asked questions
How is HRA exemption calculated?
HRA exemption = minimum of: (A) Actual HRA received from employer, (B) 50% of annual basic salary if metro city / 40% if non-metro, (C) Actual rent paid minus 10% of annual basic salary. The lowest of these three amounts is exempt from tax.
Which cities are considered metro for HRA?
For HRA exemption, only four cities are classified as metro: Mumbai, Delhi (including NCR), Kolkata, and Chennai. Employees in these cities get 50% of basic as the metro limit. All other cities — Bangalore, Hyderabad, Pune, Ahmedabad — are treated as non-metro (40% limit), even though they have high rents.
Is HRA exemption available under the New Tax Regime?
No. HRA exemption is exclusively available under the Old Tax Regime. If you opt for the New Tax Regime, your full HRA is taxable as salary income. This is one of the main reasons the Old Regime can be better for people paying high rent.
Do I need rent receipts to claim HRA exemption?
If your annual rent exceeds ₹1 lakh, your employer requires the landlord's PAN. For rent below ₹1 lakh/year, rent receipts are sufficient. When filing your ITR directly, you can claim the exemption yourself by declaring actual rent paid.
Can I claim HRA if I live in my own house?
No. HRA exemption requires you to actually pay rent. If you live in your own house, you cannot claim HRA exemption even if HRA is part of your CTC. The HRA component will then be fully taxable.
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Static model assumptions can differ from the applicable tax year, statutory rules, and your payroll structure. Figures are estimates; consult a qualified professional before relying on them.