How much HRA is tax-free
The house rent allowance in Indian salaries is partly exempt from tax. The exempt portion is the least of three amounts, so only one of them ever binds.
Running the numbers
In more detail:
- Basic salary: ₹600,000
- HRA received: ₹240,000
- Rent paid: ₹300,000
In more detail: Taxable HRA: ₹0.
The least of three
The exemption is the smallest of the HRA received, the rent paid minus 10% of salary, and a share of salary set by your city. Whichever is lowest is the exempt amount.
Testing the sensitivity
Raise basic salary by 10%, from $600,000 to $660,000, and the result moves from $240,000 to $234,000 — a change of -2.5%. It marks the field worth verifying first.
Testing one input
Move basic salary up 10%, from $600,000 to $660,000, and the result goes from $240,000 to $234,000, a shift of -2.5%. That is the figure to source properly rather than guess.
A quick sensitivity check
Raise basic salary by 10%, from ₹600,000 to ₹660,000, and the result moves from ₹240,000 to ₹234,000, a change of -2.5%. The size of that move is what tells you where care is needed.
If the second figure falls
Lower hra received by 10%, from ₹240,000 to ₹216,000, and the result moves from ₹240,000 to ₹216,000, a change of -10.0%. Set beside the first test, it shows which of the two inputs governs the result.
Metro versus non-metro
Metro cities use 50% of salary in the test, while other cities use 40%. This calculator applies the metro limit, so non-metro residents may see a slightly lower cap.