Professional HRA Exemption Calculator 2026

HRA exemption is calculated as the minimum of three values:

1. Actual HRA received during the financial year
2. 50% of (Basic Salary + Dearness Allowance) for metro cities (Delhi, Mumbai, Chennai, Kolkata) or 40% for non-metro cities
3. Actual rent paid minus 10% of (Basic Salary + Dearness Allowance)

For example, if you receive ₹20,000 monthly HRA in Mumbai (metro) with ₹80,000 basic salary and pay ₹25,000 rent: Calculation 1 = ₹2,40,000, Calculation 2 = ₹4,80,000, Calculation 3 = ₹3,00,000 - ₹96,000 = ₹2,04,000. The minimum is ₹2,04,000, so that amount is exempt from tax.

According to Income Tax Rules, only four cities qualify for 50% calculation: Delhi, Mumbai, Chennai, and Kolkata. All other cities, including Bengaluru, Hyderabad, Pune, Ahmedabad, etc., qualify for 40% calculation.

Some employers may have internal policies extending 50% to other metro cities, but for tax purposes, only these four are recognized. The classification is based on the location of your rented accommodation, not your office location.

Yes, you can claim HRA if you pay rent to your parents or spouse who own the property, provided:

• You have a formal rent agreement with them
• You pay rent regularly through banking channels (not cash)
• You obtain proper rent receipts
• The property owner declares this rental income in their tax return

This is a legitimate arrangement but may attract scrutiny. Ensure all documentation is impeccable. The rent should be at market rate - significantly lower rates may be questioned.

The essential documents for HRA exemption are:

1. Rent receipts - Preferably stamped if monthly rent exceeds ₹5,000
2. Rent agreement - Formal agreement showing terms and conditions
3. Landlord's PAN - Mandatory if annual rent exceeds ₹1,00,000
4. Proof of payment - Bank statements, cancelled cheques, or UTR numbers
5. Declaration - If landlord has no PAN, a declaration stating this fact

Digital payments and e-receipts are acceptable. Maintain records for at least 6 years as the tax department can scrutinize past returns.

Yes, you can claim both benefits simultaneously under different sections:

• HRA exemption under Section 10(13A) for rent paid at your current residence
• Home loan interest deduction under Section 24(b) for property you own but don't occupy
• Principal repayment deduction under Section 80C for the same property

This is common when you own a house in your hometown but work in another city. You claim HRA for rent paid in your work city and home loan deductions for the owned property. However, you cannot claim both for the same property.

When changing jobs, calculate HRA separately for each employment period:

1. Calculate exemption for Period 1 (Employer A) based on their salary structure
2. Calculate exemption for Period 2 (Employer B) based on their salary structure
3. Sum up both exemptions for total annual exemption

Each employer will issue Form 16 showing HRA exemption for their period. Ensure rent receipts cover both periods. If rent changed between jobs, calculate weighted average: (Rent1 × Months1) + (Rent2 × Months2) / 12.

If annual rent exceeds ₹1,00,000 and your landlord doesn't have PAN:

1. Obtain a written declaration from landlord stating they don't have PAN
2. Declaration should include landlord's name, address, and relationship to you
3. Submit this to your employer along with rent receipts
4. Some employers may still deduct TDS or disallow claim without PAN

Without PAN, the landlord cannot issue a TDS certificate (Form 16C) if TDS is deducted. Encourage your landlord to apply for PAN to avoid complications. For rents below ₹1,00,000 annually, PAN is not mandatory.