House Rent Allowance (HRA) is a salary component paid by employers to help employees with rental expenses. Under Section 10(13A) of the Income Tax Act, a portion of HRA is exempt from tax — meaning you pay zero tax on that amount.
Your HRA exemption is the minimum of these 3 amounts:
The HRA component shown in your salary slip for the year.
Metro cities = Delhi, Mumbai, Kolkata, Chennai only. All other cities including Bengaluru, Hyderabad, Pune = Non-Metro (40%).
Actual annual rent you pay minus 10% of your annual basic salary.
| Scenario | Basic Salary | Monthly Rent | HRA Exemption | Tax Saved (30%) |
|---|---|---|---|---|
| IT employee, Bengaluru (non-metro) | ₹50,000/mo | ₹20,000/mo | ₹1,80,000/yr | ₹56,160/yr |
| Manager, Mumbai (metro) | ₹80,000/mo | ₹30,000/mo | ₹2,88,000/yr | ₹89,856/yr |
| Senior manager, Delhi (metro) | ₹1,20,000/mo | ₹40,000/mo | ₹3,84,000/yr | ₹1,19,808/yr |
| Executive, Pune (non-metro) | ₹40,000/mo | ₹15,000/mo | ₹1,32,000/yr | ₹41,184/yr |
Use our free HRA calculator to get your exact exemption amount in seconds.
Enter your basic salary, HRA received and rent paid — get result in 10 seconds.
Open HRA Calculator →Yes! Paying rent to your parents to claim HRA is 100% legal and completely valid under Indian tax law. This is one of the most powerful and underused tax-saving strategies in India.
Write a simple rent agreement on ₹100 stamp paper. Mention monthly rent amount, property address, duration.
Transfer rent via NEFT/UPI every month. Keep all transaction records. Cash payment is risky and hard to prove.
Get rent receipts signed by your parent every month or quarter. Template available online.
If annual rent exceeds ₹1 lakh, you must submit parent's PAN to your employer.
Your parents must declare this as rental income in their ITR. They get a 30% standard deduction on it automatically. For senior citizen parents with low income, tax may be zero.
| Document | When Required | Format |
|---|---|---|
| Monthly rent receipts | Always required | Signed by landlord, on Rs 1 revenue stamp if >Rs 5,000/month |
| Rent agreement | Highly recommended | Stamp paper, signed by both parties |
| Landlord's PAN card | If annual rent > ₹1 Lakh | Copy of PAN card or Form 60 if landlord has no PAN |
| Bank transfer proof | Strongly recommended | Bank statement / UPI screenshot for each month |
| Regime | HRA Exemption | Best For |
|---|---|---|
| Old Tax Regime | ✅ Available — can save ₹30K–1.2L/year | People paying high rent + high 80C investments |
| New Tax Regime | ❌ NOT available | People with low deductions OR income under ₹12L |
If you pay more than ₹15,000/month in rent AND have ₹1.5L in 80C investments, Old Regime may still save you more tax than New Regime's zero-tax up to ₹12L benefit. Use our Income Tax Calculator to compare both regimes for your exact salary.
This maximizes the 3rd condition. Paying ₹5,000/month vs ₹15,000/month makes a huge difference in exemption.
If your current HRA is less than 40-50% of basic, ask HR to adjust — it's often possible within the same CTC.
HRA + ₹1.5L 80C + ₹50K NPS + ₹25K 80D health insurance = total deductions of ₹3.5L+ in Old Regime.
Many people lose HRA benefit simply because they don't have rent receipts. Start collecting from April 1 every year.
If you missed submitting receipts to HR, you can still claim HRA exemption while filing ITR yourself. The deduction is yours by law.