HRA exemption calculator
Your HRA (House Rent Allowance) exemption is the least of three amounts: actual HRA received, rent paid minus 10% of basic salary, and 50% of basic in a metro or 40% elsewhere. It applies only under the old tax regime, and rent above ₹1,00,000 a year needs your landlord's PAN (Permanent Account Number).
Basic salary for the year, plus DA (Dearness Allowance) if it forms part of retirement benefits.
The HRA component on your salary structure for the year, from your payslip or CTC sheet.
We annualise this: ₹20,000 x 12 = ₹2,40,000 per year.
Eight cities carry the 50% of basic limit from 1 April 2026: Delhi, Mumbai, Kolkata, Chennai, Hyderabad, Pune, Ahmedabad and Bengaluru. Everywhere else the limit is 40%.
Landlord PAN required
Your annual rent of ₹2,40,000 exceeds ₹1,00,000, so your employer must collect your landlord's PAN (Permanent Account Number) before allowing the exemption in payroll. No PAN, no exemption through TDS.
Keep these proofs ready
- Rent receipts for every month, with revenue stamp where required
- Registered or notarised rent agreement in your name
- Landlord PAN if annual rent exceeds ₹1,00,000
- Bank transfer trail: pay rent from your account, not cash
HRA exempt from tax
₹1,80,000
Taxable HRA remaining: ₹60,000 per year.
The three limits on one scale
Rupees for the year. The smallest of the three is exempt.
Actual HRA received
₹2,40,000
Rent paid minus 10% of basic
₹1,80,000
Smallest: your exemption
50% of basic (metro)
₹3,00,000
- Dashed line: the smallest of the three, ₹1,80,000, which is the HRA exempt from tax. Of the HRA received, ₹60,000 stays taxable.
| Least of three | Amount |
|---|---|
| Actual HRA received | ₹2,40,000 |
| Rent paid minus 10% of basicYour exemption | ₹1,80,000 |
| 50% of basic (metro) | ₹3,00,000 |
The rule
How does the least-of-three rule work?
Rule 279 of the Income-tax Rules, 2026 (earlier Rule 2A) compares three amounts for the year and exempts only the smallest. Whatever HRA remains is taxed as salary.
Worked example: basic ₹6,00,000, HRA ₹2,40,000, rent ₹20,000 a month in Mumbai
| Leg | Amount |
|---|---|
| Actual HRA received | ₹2,40,000 |
| Rent paid minus 10% of basicLeast | ₹1,80,000 |
| 50% of basic (metro) | ₹3,00,000 |
The exemption is ₹1,80,000: rent of ₹2,40,000 minus 10% of basic, that is ₹60,000. The remaining ₹60,000 of HRA is taxed as salary.
Old regime only, said plainly
The HRA exemption is not available in the new tax regime. If you have opted for the new regime, or never opted out of it (it is the default), your entire HRA is taxable. High rent plus section 123 (earlier 80C) investments can still tip the scales towards the old regime: run both before you pick.
Documents that survive scrutiny
- Monthly rent receipts with the landlord's signature
- Rent agreement in your name for the claim period
- Landlord PAN once annual rent crosses ₹1,00,000
- Bank statements showing rent actually paid, not cash
Frequently asked questions
Can I claim HRA exemption in the new tax regime?
No. The HRA exemption, now in Schedule III of the Income-tax Act, 2025 read with Rule 279 (earlier section 10(13A) and Rule 2A), is available only in the old regime. In the new regime your full HRA is taxable. If your rent is high, compare both regimes before choosing: the HRA exemption plus other deductions can still make the old regime cheaper.
Can I pay rent to my parents and claim HRA?
Yes, if the arrangement is real. The house must be owned by them, you must actually transfer rent from your bank account, and they must show it as rental income in their return. Cash payments with no trail are the fastest way to lose the claim in scrutiny.
Is Bangalore a metro city for HRA?
Yes, from 1 April 2026. Rule 279 of the Income-tax Rules, 2026 lists eight cities at the 50% of basic limit: Delhi, Mumbai, Kolkata, Chennai, Hyderabad, Pune, Ahmedabad and Bengaluru. Before that only Delhi, Mumbai, Kolkata and Chennai qualified. Gurgaon, Noida and every other city use 40% of basic, whatever their rents look like.
What happens if my annual rent crosses ₹1,00,000?
Your employer must collect your landlord's PAN (Permanent Account Number) before allowing the exemption through payroll TDS. If the landlord has no PAN, a signed declaration with name and address is required. The rent declaration, Form 124 (earlier Form 12BB), now also asks for your relationship with the landlord. Without these, the exemption is denied in payroll and you must claim it in your return.
Can I claim both HRA and home loan benefits?
Yes, when it is genuine: for example you own a house in one city and rent in another where you work. You can claim the HRA exemption on the rent and the home loan interest deduction under section 22 (earlier 24(b)) on the owned house, in the old regime.
Keep exploring
- Income tax calculator
Compare old and new regimes side by side, with your HRA exemption in the old regime numbers.
- CTC to take-home calculator
See your full salary structure: basic, HRA, PF (Provident Fund), deductions and in-hand pay.
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