HRA Calculator

Did you know that House Rent Allowance (HRA) is not just a salary component, but also a powerful tool to help you save on taxes? Many salaried employees overlook this essential benefit, missing out on significant tax savings. HRA is designed to ease your rental expenses.

The amount of HRA you’re eligible for depends on your salary structure, monthly earnings, and the city you live in. But did you know you can reduce your taxable income by calculating it strategically? Let’s walk you through how the Share.Market online HRA Calculator can help.

In recent years, the cost of living in Indian cities has surged dramatically, thanks to rising inflation and higher living costs. For employees living in rented homes, managing these expenses can be challenging. This is where HRA comes in. Many organisations offer HRA to help employees ease the burden of rent. With the 7th Pay Commission updates, HRA slabs have been redefined, categorising Indian cities into three distinct groups: 

• Slab X encompasses the most expensive urban areas, where a higher HRA exemption is necessary
• Slab Y represents cities with relatively lower living costs, offering a moderate allowance 
• Slab Z includes smaller towns and rural areas where the cost of living is considerably lower, reflecting in a reduced HRA

So, understanding how to calculate your HRA is crucial for maximising its benefits. An online HRA exemption calculator will let you determine the allowance you’re entitled to, ensuring you’re fully aware of your tax exemptions.

If you’re getting HRA as a part of your salary, using an online HRA calculator will make life a lot easier while helping you avoid mistakes.

To claim HRA tax exemptions, three conditions must be met:

• You must be a salaried employee with HRA included in your salary package 
• You must be living in rented accommodation
• Your HRA must exceed 10% of your basic salary

Note: Self-employed individuals do not qualify for this exemption

Depending on the city you live in, House Rent Allowance exemptions differ. For example, if you live in a metro city like Mumbai, Bengaluru, Delhi, Chennai, or Kolkata, you can claim a higher HRA of up to 27%. For tier-2 and tier-3 cities, the exemption may be 18% or 9%, respectively.
By using our HRA tax exemption calculator, you can efficiently plan your taxes and financial future based on your salary and location.

When it comes to calculating HRA, the rule is simple: You can claim the lowest of the following three amounts:

1. Actual Rent Paid Minus 10% of Basic Salary: This means the total rent you pay each year minus 10% of your annual basic salary (plus Dearness Allowance, if applicable)

2. HRA Received from Employer: This is the total House Rent Allowance your employer gives you annually

3. Limit Based on City:

• Metro Cities (Mumbai, Delhi, Chennai, Kolkata): 50% of your annual basic salary (plus Dearness Allowance, if applicable)
• Non-Metro Cities: 40% of your annual basic salary (plus Dearness Allowance, if applicable)

Let’s say you live in Delhi (considered a metro city) and earn a monthly basic salary of ₹50,000 with a DA of ₹10,000. You pay a monthly rent of ₹15,000. Here’s how to calculate your HRA exemption:

Actual Rent Paid Minus 10% of Basic Salary

Annual Rent Paid = ₹15,000 x 12 = ₹180,000

Basic Salary + DA = ₹50,000 (basic) + ₹10,000 (DA) = ₹60,000 per month

10% of Basic Salary = ₹60,000 x 10/100 x 12 = ₹6,000 x 12 = ₹72,000 per year

Actual Rent Paid – 10% of Basic Salary = ₹180,000 – ₹72,000 = ₹1,08,000 per year

HRA Received from Employer: Let’s assume your employer provides an annual HRA of ₹1,20,000

Limit Based on City (Delhi – Metro City):

50% of your (annual basic salary + DA)

= ₹7,20,000 x 50/100 = ₹3,60,000 per year

HRA Exemption

In this example, the lowest amount is your actual rent paid minus 10% of the basic salary (₹1,08,000). So, this is the HRA exemption you can claim on your taxes.

Using Share.Market’s online HRA calculator is super simple. Here’s what you need to do:

Step 1: Enter your basic salary, DA (if any), HRA received, and rent paid.
Step 2: Select whether you live in a metro city or not.

That’s it! In a few seconds, you’ll know how much HRA exemption you can claim and how much tax you can save.

Here is why you should use the HRA exemptions calculator by Share.Market:

• You just need to enter a few details and our calculator will do all the math for you.
• Our online calculator is error-free, which means accurate calculations all the time!
• Knowing your HRA exemption upfront makes tax planning much easier.
• The calculator is available 24/7. Use it anytime you want, as often as you need.