House Rent Allowance (HRA) is one of the key components of a salaried employee’s income. Employers provide HRA to help cover rental expenses, but many people don’t realise that HRA can also reduce your tax burden.
The HRA amount varies depending on your salary structure, actual rent paid, and the city you live in. If you are a salaried employee staying in a rented home, the HRA calculator helps you estimate how much of your allowance is tax-exempt.
What Is an HRA Calculator?
With the rising cost of living across Indian cities, HRA plays an important role in easing rental expenses. After the 7th Pay Commission, cities were categorised into Slab X, Y, and Z based on living costs:
- Slab X – Metro cities with highest rent levels
- Slab Y – Tier-2 cities
- Slab Z – Tier-3 cities
An HRA calculator helps you determine the tax-exempt portion of your House Rent Allowance based on these slabs and your salary details.
How Can an HRA Calculator Help You?
To claim HRA exemption, you must meet three conditions:
- You must be a salaried employee, and HRA should be part of your salary.
- You must be living in a rented property.
- Your HRA must exceed 10% of your salary (basic + DA).
Once these are met, the Paisaseekho HRA calculator helps you determine how much exemption you can claim.
Additional advantages:
- Helps you calculate HRA exemption based on your city category (X, Y, Z).
- Shows how much tax you’ll save during the financial year.
- Helps plan future expenses by understanding how much HRA contributes to your take-home salary.
- Accounts for the percentage allotted to HRA—e.g., metro cities may offer up to 50% of basic salary, while non-metro cities typically offer 40% or lower.
How to Calculate HRA in India?
For HRA calculation, “salary” includes Basic Salary + Dearness Allowance (DA) + commissions (if linked to sales).
The exemption is the lowest of the following three amounts:
- Actual HRA received
- Rent paid minus 10% of basic salary
- 50% of basic salary (metro cities) or 40% (non-metro)
Example
Consider an employee staying in Delhi with the following salary structure:
| Component | Amount |
| Basic Salary | ₹23,000 |
| HRA | ₹15,000 |
| Conveyance Allowance | ₹3,000 |
| Medical Allowance | ₹1,250 |
| Special Allowance | ₹2,300 |
Total monthly salary = ₹44,500
Using the three HRA criteria:
- Rent paid – 10% basic salary → ₹12,000 – ₹2,300 = ₹9,700
- Actual HRA received → ₹15,000
- 50% of basic salary → ₹11,500
The lowest is ₹9,700, so that is the HRA amount that becomes tax-exempt.
How to Use the Paisaseekho HRA Calculator
Using the calculator is simple:
- Enter your basic salary and HRA received (as per payslip).
- Enter actual rent paid.
- Indicate whether you live in a metro city.
The calculator instantly shows your HRA exemption and helps you understand how much tax you can save.
Benefits of Using an HRA Calculator
- Accurate and error-free calculations
- Unlimited usage for different salary scenarios
- Helps you claim the maximum allowable tax exemption
- Automatically accounts for city category and salary variables
FAQs
1. How much of my HRA is tax-exempt?
The exemption is the lowest of:
- Actual HRA received
- Rent paid minus 10% of salary
- 40% of salary (non-metro) or 50% (metro)
2. Can I claim HRA tax exemption if my landlord is an NRI?
Yes, but you may need to deduct TDS at 30% on rent paid and submit the proof.
3. What documents are required to prove rent payment?
- Rent receipts
- Rental agreement
- PAN of landlord (if annual rent exceeds ₹1 lakh)
4. Can I claim HRA and home loan tax benefits together?
Yes. If you live in a rented house but own a property elsewhere, you may claim both HRA and home loan deductions (subject to conditions).
5. Is Dearness Allowance (DA) included while calculating HRA?
Yes, HRA calculation is based on Basic Salary + DA.
