What is HRA?
House Rent Allowance
HRA is a salary component paid by employers to cover an employee's rented accommodation costs, and is partially or fully exempt from tax under Section 10(13A) — but only under the old tax regime. The exempt amount is the lowest of three specific components, not the full HRA received.
The exemption is calculated as the minimum of: (1) actual HRA received, (2) rent paid minus 10% of Basic+DA, and (3) 50% of Basic+DA for metro cities (Delhi, Mumbai, Kolkata, Chennai) or 40% for non-metro cities.
HRA exemption is not available at all under the new tax regime — the entire HRA component becomes fully taxable if you opt for it.
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