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How much HRA exemption can you claim on an ₹8 LPA salary in a metro city?
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Calculate your HRA tax exemption on an ₹8 LPA salary if you live in a metro (Mumbai, Delhi, Kolkata, Chennai) and pay rent — using the three-condition minimum formula.
Why HRA Exemption Is the Biggest Salaried Saving
House Rent Allowance is one of the few deductions that survives meaningfully in the new tax regime for some structures, and remains a top deduction in the old regime. For an ₹8 LPA earner in a metro paying ₹20,000 monthly rent, the HRA exemption can shelter about ₹1.2 lakh of annual income — translating to ₹24,000-36,000 in tax saved depending on slab.
HRA exemption is calculated as the LOWEST of three values: (1) actual HRA received from employer, (2) 50% of basic salary for metro / 40% for non-metro, and (3) rent paid minus 10% of basic. Most salaried people don’t realise their HRA component might be too low to use the full deduction — restructuring salary to increase HRA can unlock more exemption.
Three things to know: (a) you need rent receipts or a rental agreement; PAN of landlord is required if annual rent exceeds ₹1 lakh; (b) you can claim HRA AND home loan interest if your home is in a different city from where you rent; (c) under the new regime, HRA exemption is not available — only the standard deduction. This is a major argument for staying in the old regime if your HRA is significant.