What this calculator does
Salaried employees residing in rented accommodation can claim tax exemption on HRA under Section 10(13A) of the Income Tax Act, 1961 (available under the Old Tax Regime).
Formula & Mathematical Logic
Exempt HRA = Minimum of (Actual HRA, 50%/40% of Basic Salary, Rent Paid − 10% of Basic)
Basic Salary + DA, HRA component received from employer, total annual rent paid to landlord, and city classification (Metro vs Non-Metro).
How WealthAura calculates this
Calculates the statutory three-condition rule: 1) Actual HRA received, 2) 50% of Basic Salary for metro cities (Delhi, Mumbai, Kolkata, Chennai) or 40% for non-metro, and 3) Total rent paid minus 10% of basic salary. The lowest of the three is 100% tax-exempt.
Worked example
For a basic salary of ₹6,00,000, HRA received of ₹2,40,000, and annual rent of ₹2,16,000 in a metro: 1) HRA = ₹2.4L, 2) 50% Basic = ₹3L, 3) Rent - 10% Basic = ₹2.16L - ₹60k = ₹1.56L. Exempt HRA is ₹1,56,000, saving substantial income tax.
Input sensitivity & what changes
Living in a metro city increases the salary limit from 40% to 50%, which can enhance exemption when rent paid is exceptionally high.
How to interpret the result
Determines the exact portion of HRA that is deducted from gross taxable income on your Form 16.
Key factors that influence the outcome
PAN requirement of landlord (mandatory if annual rent exceeds ₹1,00,000), rent receipts, valid rental agreement, and payment mode.
Common calculation mistakes to avoid
Attempting to claim HRA under the New Tax Regime, or failing to obtain the landlord's PAN when annual rent exceeds ₹1,00,000.
Underlying assumptions & legal caveats
Employee actually pays rent for accommodation not owned by them, and opts for the Old Tax Regime.
Read the related guide →