The least-of-three formula
Section 10(13A) with rule 2A sets the exempt HRA as the least of:
- The HRA actually received during the year
- Rent paid minus 10% of basic salary plus dearness allowance
- 50% of basic+DA if the rented home is in Delhi, Mumbai, Kolkata or Chennai — 40% in any other city
Example — basic+DA ₹6,00,000; HRA received ₹2,40,000; rent ₹3,00,000; metro: actual HRA ₹2,40,000; rent − 10% = ₹2,40,000; 50% ceiling = ₹3,00,000. The exemption is the least: 2,40,000, so taxable salary — and taxable income — drops by that amount.
Least-of-three calculator
The table below is the same engine function the calculator uses — change any number and each statutory amount updates.
Least-of-three calculator
| Statutory amount | Value |
|---|---|
| Actual HRA received | ₹2,40,000 |
| Rent − 10% of basic+DA | ₹2,40,000 |
| 50% of basic+DA (city ceiling) | ₹3,00,000 |
| Least of the three = exempt HRA | ₹2,40,000 |
Exempt HRA: ₹2,40,000
Worked examples at a glance
| Case | Amounts | Exemption |
|---|---|---|
| Metro, rent high | HRA ₹2,40,000; rent ₹3,00,000 → rent−10% ₹2,40,000; ceiling ₹3,00,000 | ₹2,40,000 |
| Non-metro, rent high | HRA ₹2,40,000; rent ₹3,00,000 → rent−10% ₹2,40,000; ceiling ₹2,40,000 | ₹2,40,000 |
| Metro, rent moderate | HRA ₹2,40,000; rent ₹2,40,000 → rent−10% ₹1,80,000 | ₹1,80,000 |
| Rent small | HRA ₹2,40,000; rent ₹60,000 → rent−10% ₹0 | ₹0 |
Frequently asked questions
What is the HRA exemption formula?
The exempt amount is the least of three figures: the HRA actually received, rent paid minus 10% of basic salary plus dearness allowance, and 50% of basic+DA if you live in Delhi, Mumbai, Kolkata or Chennai, 40% otherwise. Only the least goes out of taxable salary.
When is the exemption zero?
When basic+DA is zero (the formula needs it), when rent is zero, when rent does not exceed 10% of basic+DA, or when the HRA received itself is zero.
Is the exemption available in the new regime?
No. Section 115BAC removes the HRA exemption in the new regime; the HRA received is then fully taxable. The calculator warns you when it computes your new-regime total with an HRA input present.
Do I need rent receipts?
Employers handle the exemption and ask for receipts or proof of rent, particularly above ₹3,000 per month where PAN details of the landlord are required. The tax arithmetic on this page is the same either way.
Can I claim both HRA and a home-loan interest deduction?
Yes, if you pay rent and also own a different self-occupied financed home — the two claims answer different questions. Renting to yourself inside the same household is not eligible.