HRA India Tax Calculator – Get Best Rent Value

HRA exemption for tax refund online calculator. Rent receipts required >3000 /month. Landlord PAN needed >1 Lakh/year. Pay rent to parent/wife to save tax.

Anil Gupta
  By Anil Gupta    Updated  14 Jun, 20


HRA is a house rent allowance paid by the company to meet your rent expenses. HRA is tax-free up-to an amount based on 3 rules defined by the Income-tax department.

HRA Exemption Calculator



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If you are a salaried professional and living in a rented house, HRA exemption is one of the biggest tax saving options, under Section 10 (13A) of the Income Tax Act.
For self-employed, HRA tax deductions under Section 80 GG are available.

Employer does not provide HRA Allowance

You can claim the HRA Income Tax exemption even if your employer does not provide an HRA allowance as an exempted allowance on ITR (Income tax return).

Calculate the HRA exempted amount using the above calculator and mention that amount on your ITR (Indian Income Tax Return) as ‘Exempted allowances‘.
Your final tax refund will increase based on the exempted HRA amount.

What Documents are required for claiming HRA tax rebate?

Documents required to claim HRA tax exemption include rent receipts if rent per month is greater than 3 thousand rupees per month.

Can I Claim both HRA and Tax Rebate on Home Loan?

You can claim both HRA and Home Loan tax exemption as per Income tax rules.

If you have rented a house for yourself and paying home loan EMIs, you can claim income tax exemption for both at the same time.

The owned house should be in a city which is too far to travel daily from your work location like 50+ km away.

There is no documented Kms limit in the tax laws though but 50+ is considered safe to claim and convince income tax officer.

Can I pay rent to my wife or spouse or parents to claim HRA tax benefit?

You can pay house rent to your wife or parent legally and claim HRA. In the eyes of Income-tax, each individual is a separate entity and hence can have his own income.

Income Tax Rules

The 3 rules of HRA tax exemption (You get least of three):

  1. Actual HRA received during the financial year.
    • 50% of BASIC salary – If residing in METRO city (Only Mumbai, Kolkata, Delhi or Chennai)
    • 40% of BASIC salary – If residing in Non-METRO city
  2. Rent paid in excess of 10% of BASIC salary. i.e. Excess Of Rent = Rent Paid – 10% of Basic

HRA (one of the components of your salary package), is actually defined by your Basic salary in most cases. i.e. it is normally 40% or 50% of your basic salary.

Example:
For a basic salary of INR 10,000 per month, your HRA component would be either INR 4000 or INR 5000.
The 40% or 50% factor is dependent on your specific employer policy.

The HRA income tax rebate of either picking 40% or 50% is defined by your residence location METRO status eligibility.

Paying Rent equal to HRA Allowance?

Paying rent the same as HRA allowance will not give you maximum HRA tax exemption as rules are clever.

Basic salary10,000
HRA (50% of Basic Salary)5000
ResidenceMetro City – Delhi
Rent paid/declared5,000 per month

If you are declaring rent of Rs. 5000 per month considering that you are declaring more than your HRA amount i.e. INR 5,000, would not make any difference to final tax exemption, then you are wrong.

Quickly running through the 3 rules would make things clear here.

RuleDescriptionEligible Amount
Rule 1Actual HRA (12 months)60,000 (12*5,000)
Rule 250% of yearly Basic Salary60,000 (50% of 10,000*12)
Rule 3Excess Of Rent = Rent Paid – 10% of Basic48,000 (60,000 – 12,000 [10% of 1,20,000])
Least of the three amount:48,000

If you read carefully, you are only eligible for Rs. 48,000 as a tax deduction even though your yearly HRA and rent-paid (and declared) amount is 60,000.

Income tax officials have designed the rules so cleverly that you will always end up getting the least tax HRA tax rebate if you look at the HRA component alone.

How to get maximum HRA exemption?

The HRA income tax rules are based on basic salary, HRA amount, and rent paid/declared. You can’t change the basic salary and HRA component. Hence, the idea is if you pay a rent figure which brings the amount in all three rules equivalent to the maximum of three, you would be eligible for a maximum tax rebate.

Example: We are just increasing the rent paid amount to Rs. 6,000 keeping basic and HRA same as in the above example and re-calculate the 3 rules:

RuleDescriptionEligible Amount
Rule 1Actual HRA (12 months)60,000 (12*5,000)
Rule 250% of yearly Basic Salary60,000 (50% of 10,000*12)
Rule 3Excess Of Rent = Rent Paid – 10% of Basic60,000 (72,000 – 12,000 [10% of 1,20,000])
Least of the three amount:60,000

If you look at the least amount now, it is INR 60,000 which is equal to the maximum of three values too.


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Anil Gupta
  By Anil Gupta           

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