Most salaried employees receive HRA every month without knowing how much of it actually reduces their tax. The answer rests on three figures — and only the smallest one counts.
HRA sits inside your salary as a designated component for housing costs. Part is taxable. Part is not. The split depends on where you live and how much rent you pay.
House Rent Allowance is a standard part of the salary structure for most salaried employees in India. It shows up separately on every payslip. For employees living in rented accommodation, a portion of it escapes income tax entirely.
This benefit is encoded in Section 10(13A) of the Income Tax Act, 1961. It is not a deduction you claim separately — it is excluded from gross total income before your taxable salary is computed. That makes it more efficacious in its effect than most deductions under Chapter VI-A.
The exemption is not available to self-employed individuals. They have a separate provision under Section 80GG. It is also not available if you own the house you live in — even if HRA forms part of your CTC.
Enter your annual figures. The calculator applies the three-criterion rule and shows the breakdown instantly.
This is an estimate based on the three-criterion rule under Section 10(13A). DA is excluded unless your employment terms specify otherwise. Consult your payroll team or a tax professional for finalised figures.
The second criterion changes by city type. Only four cities carry the metro designation under this provision, regardless of how steep rents are elsewhere.
Only four cities hold this designation. The classification has not been revised since the provision was introduced.
High-rent cities like Bengaluru still fall under 40%. The law has not been amended to reflect current rental realities in these markets.
You cannot cherry-pick. All three need to be true simultaneously for the exemption to apply in a given period.
Your employer will ask for proof before processing the exemption in payroll. Keep these through the financial year and retain them for at least a year after filing your return.
Offrd generates payslips with accurate HRA breakdowns and salary component splits — so your employees always have the right numbers when they file their returns.