House Rent Allowance (HRA) Calculation

House Rent Allowance (HRA) is an amount that your employer pays you to assist with your rent. The government allows you to deduct a portion or the whole amount from your taxable income according to Section 10 (13A) of the Income Tax Act. The HRA calculation involves determining the least of the following:

• 1. Actual HRA Received: The actual amount you receive as HRA.


• 2. Actual Rent Paid Minus 10% of Salary: The actual amount you pay as rent minus 10% of your salary.


• 3. 40% (or 50% for urban/metro cities) of Salary: 40% of your salary (or 50% if your house is situated in an urban or metro city like Mumbai, Calcutta, Delhi, or Madras).

The least of above three is considered for HRA exemption.