HRA exemption calculator
If you rent and use the old regime, part of your HRA is tax-free. Give me your basic pay, HRA and rent, and I’ll work out exactly how much.
Dearness allowance counts only if it’s part of retirement benefits.
Metro means Delhi, Mumbai, Kolkata, Chennai. The draft Income-tax Rules, 2026 propose adding Bengaluru, Hyderabad, Pune, Ahmedabad from tax year 2026-27; until that’s final, treat them as “other”.
Tax-free HRA, a year
₹1,80,000
₹15,000 a month · taxable HRA ₹1,20,000
- HRA you received
- ₹3,00,000
- Rent paid − 10% of basic + DA · the least
- ₹1,80,000
- 50% / 40% of basic + DA
- ₹3,00,000
- Exempt HRA
- ₹1,80,000
- Taxable HRA
- ₹1,20,000
HRA exemption is available in the old regime only. The new regime taxes all of your HRA.
Estimates for planning, not tax or legal advice. Rules change with each Budget and differ by employer, so check your offer letter, payslip or a professional before you act.
How it’s calculated
The formula
1. HRA actually received
2. Rent paid − 10% of (basic + DA)
3. 50% of (basic + DA) in a metro, 40% elsewhere
Taxable HRA = HRA received − exempt HRA
Worked example
Basic + DA ₹6,00,000 a year, HRA ₹3,00,000, rent ₹20,000 a month (₹2,40,000), living in Mumbai.
- HRA received: ₹3,00,000
- Rent − 10% of salary: ₹2,40,000 − ₹60,000 = ₹1,80,000
- 50% of salary (metro): ₹3,00,000
The least is ₹1,80,000, so that much is tax-free and the other ₹1,20,000 is taxed with your salary.
The rules
- The exemption applies only in the old regime, and only for months you actually pay rent and receive HRA.
- Metro (50%) means Delhi, Mumbai, Kolkata and Chennai. The draft Income-tax Rules, 2026 propose adding Bengaluru, Hyderabad, Pune and Ahmedabad; that isn’t final yet.
- “Salary” here is basic plus dearness allowance where DA counts for retirement benefits, plus any commission fixed as a share of turnover.
- If your rent is more than ₹1,00,000 a year, your employer will ask for your landlord’s PAN.
- The exemption is section 10(13A) of the Income-tax Act 1961. The Income-tax Act, 2025 applies from tax year 2026-27 and renumbers these sections.
Sources
- Income Tax Department (incometax.gov.in): HRA exemption under section 10(13A) and rule 2A
- Income Tax Department (incometaxindia.gov.in): the Act, rules and drafts
Questions people ask
Can I claim HRA in the new regime?
No. The new regime doesn’t allow the HRA exemption, so all of your HRA is taxable there. Use the income tax calculator to see whether the old regime, with HRA and your other deductions, still costs less.
Is Bengaluru a metro for HRA?
Not under the current rules: only Delhi, Mumbai, Kolkata and Chennai get 50%. The draft Income-tax Rules, 2026 propose adding Bengaluru, Hyderabad, Pune and Ahmedabad. Until the final rules say so, plan with 40%.
Can I claim HRA if I pay rent to my parents?
Yes, if you really pay them, ideally by bank transfer with a rent agreement, and they declare the rent as their income. You can’t claim HRA for a house you own and live in.
What if I don’t get HRA from my employer?
If HRA isn’t part of your salary, you can’t use this exemption. Section 80GG may let you deduct some rent instead, within its own limits, in the old regime.
What proof do I need?
Rent receipts or a rent agreement for your employer, and your landlord’s PAN if annual rent is above ₹1 lakh. If you miss your employer’s deadline, you can still claim it in your return.
Why is my exempt HRA zero?
Most often the rent is 10% of salary or less, so the second limb comes to nothing. Check that you entered a full year’s rent, not one month’s.
Numbers done. Now the decision.
Tell me what the numbers mean for you, and I’ll help you decide what to do next.