What is HRA Exemption?
HRA Exemption — Quick Reference (Metro, 40% Basic)
| Monthly Basic | HRA Received (50%) | Rent Paid | Monthly Exemption | Annual Tax Saving (30%) |
|---|---|---|---|---|
| ₹20,000 | ₹10,000 | ₹12,000 | ₹10,000 | ₹37,440 |
| ₹30,000 | ₹15,000 | ₹18,000 | ₹15,000 | ₹56,160 |
| ₹50,000 | ₹25,000 | ₹30,000 | ₹25,000 | ₹93,600 |
| ₹80,000 | ₹40,000 | ₹50,000 | ₹40,000 | ₹1,49,760 |
| ₹1,00,000 | ₹50,000 | ₹60,000 | ₹50,000 | ₹1,87,200/yr |
Metro vs Non-Metro Cities
| City | Metro/Non-Metro | HRA % of Basic |
|---|---|---|
| Mumbai, Delhi, Kolkata, Chennai | Metro | 50% of basic |
| Bengaluru, Hyderabad, Pune | Non-Metro | 40% of basic |
| Noida, Gurgaon, Faridabad | Non-Metro (despite NCR) | 40% of basic |
| All other cities | Non-Metro | 40% of basic |
How is HRA Exemption Calculated?
Metro vs Non-Metro
Metro cities (Mumbai, Delhi, Kolkata, Chennai): 50% of basic salary. All other cities: 40% of basic salary. This is one of the few tax rules where city classification directly affects your tax bill.
Example — ₹50,000 basic, ₹25,000 HRA, ₹20,000 rent, Metro
(1) HRA received: ₹25,000. (2) 50% of basic: ₹25,000. (3) Rent − 10% of basic: ₹20,000 − ₹5,000 = ₹15,000. Exemption = Min(25,000, 25,000, 15,000) = ₹15,000/month.
Example Calculation
Frequently Asked Questions
HRA exemption = minimum of: (1) actual HRA received, (2) rent paid minus 10% of basic salary, (3) 50% of basic for metro or 40% for non-metro cities.
No — HRA exemption is only available under the old tax regime. If you choose the new regime, your entire HRA received is taxable.
No — for HRA purposes, only four cities are metro: Mumbai, Delhi, Kolkata, Chennai. Bengaluru, Hyderabad, and Pune are non-metro despite being major cities — HRA exemption ceiling is 40% of basic.
For HRA claims up to ₹3,000/month, no receipts needed. Above ₹3,000/month, rent receipts are required. If annual rent exceeds ₹1 lakh, landlord's PAN is mandatory.
Yes — if you own a house in one city and rent in another for work. You can claim HRA for the rented accommodation and home loan deductions for the owned property simultaneously.
Related Calculators
Disclaimer: Results are for informational and educational purposes only — not financial, tax, or legal advice. Tax slabs, rates (EPF, PPF, home loan), and rules shown are based on data available in 2025 and may change. Always verify with a qualified professional or official government sources before making financial decisions.