House Rent Allowance (HRA) is an essential part of your salary, provided by employers to help with house rental expenses. However, many are unaware that HRA can also be used to save taxes. The HRA amount is determined by factors like your salary structure, actual earnings, and the city where you live. If you are a salaried employee living in a rented property, you can use our HRA calculator to determine your tax liability.

In many Indian cities, the cost of living has significantly increased over the last decade, largely due to higher disposable incomes and inflation. To ensure employee welfare, many employers offer a House Rent Allowance (HRA) for those living in rented homes. This HRA calculator helps you determine the amount you can claim as an allowance.

Following the 7th Pay Commission’s recommendations, HRA slabs have been updated, dividing cities into three distinct categories. Slab X includes highly urbanized cities where HRA exemptions are crucial. Slab Y covers moderately priced cities.

Using an online HRA calculator is beneficial for salaried employees receiving housing rental allowance. You can claim HRA exemptions under the following conditions:

• You must be a salaried individual, as self-employed persons are not eligible.
• You need to be living in rented accommodation.
• The HRA must exceed 10% of your salary.

Our HRA calculator helps determine how much tax you need to pay on your HRA, along with additional benefits:

• The city you reside in will impact the HRA exemption calculation. Slab X cities are typically more expensive to live in, while the costs decrease in Slab Y and Z cities.
• The calculator assists in calculating the tax you owe in a financial year.
• HRA exemptions are also dependent on the city’s living expenses. For example, in metro cities like Delhi, Mumbai, Chennai, etc., HRA may go up to 27%, while it could be 18% and 9% in tier-2 and tier-3 cities.
• Based on your HRA allocation, you can plan for the future using the calculator.

Sensex India uses a standard formula to determine the total House Rent Allowance payable. The salary considered for HRA calculation includes basic salary, Dearness Allowance, and other variable commissions.

Our calculator also functions as an HRA tax benefit tool, where the actual exemption limit is the lowest of these three amounts:

• The actual rent paid minus 10% of the basic salary.
• The total (gross) HRA provided by the employer.
• 40% to 50% of the basic salary, depending on how costly the residential area is.

For example, let’s consider a fictional scenario where Person A lives in Delhi and pays Rs 12,000 per month for accommodation. Here’s the breakdown of his pay structure according to our HRA calculator:

When adding these components, Person A has a monthly salary of Rs 44,500.

Using our HRA calculator, the following amounts are calculated:

• Actual rent paid minus 10% of basic salary: Rs 9,700
• HRA provided by the employer: Rs 15,000
• 50% of basic salary: Rs 11,500

The lowest amount among these three is Rs 9,700, so Person A is eligible for an HRA exemption of Rs 9,700 on their taxable income.

Follow these simple steps to use our HRA calculator:

• Step 1: Enter your basic salary and the HRA provided, as listed on your salary slip.
• Step 2: Enter the actual rent paid and select whether you live in a metro city from the dropdown menu.

The HRA calculation will help you save taxes efficiently.

The key benefits of using a reliable HRA calculator in India are:

• The calculator is error-free and can be used as many times as needed.
• You can claim the tax exemptions based on the calculated HRA values.
• It considers all variables that impact the HRA calculation, making the process seamless and accurate.