How the exemption is calculated
The exempt amount under Section 10(13A) is the least of three values:
Whichever number is smallest is your exempt portion. The balance is fully taxable as part of salary.
City classification
Only four cities qualify for the 50% rate under the Income Tax Act:
- Metro (50%) — Delhi, Mumbai, Chennai, Kolkata
- Non-metro (40%) — every other city, including Bengaluru, Hyderabad, Pune, Ahmedabad, Gurgaon, Noida and Tier-2 cities
The classification is based on legal definition, not the size of the city. Bengaluru is among India's largest urban areas but, for HRA purposes, gets the 40% rate.
Documentation required
- Rent receipts — needed if HRA exceeds ₹3,000 per month (₹36,000 per year)
- Landlord's PAN — needed if annual rent exceeds ₹1 lakh (or a written declaration if landlord doesn't have PAN)
- Rent agreement — strongly recommended; some employers require it for annual rent ≥ ₹50,000
- Form 12BB — declaration to employer at start of FY for tax-deduction purposes
Paying rent to parents or relatives is allowed and fully claimable, provided the rent is genuine (actually paid via bank transfer) and the landlord declares the rental income on their own ITR.
FAQ
Can I claim HRA in the new tax regime?
No. HRA exemption u/s 10(13A) is an old-regime-only benefit. If you opt for the new regime, the entire HRA received becomes taxable.
I own a house elsewhere — can I still claim HRA?
Yes, as long as you actually pay rent for the place you live in (different from the house you own). The owned house's home-loan interest can also be claimed separately u/s 24(b).
What if I don't receive HRA from employer?
Then 10(13A) doesn't apply — but Section 80GG allows a deduction up to ₹60,000 / year (₹5,000 / month) subject to its own conditions. Use this calculator only if you receive HRA.