HRA Exemption Calculator India 2026
Compute your House Rent Allowance tax exemption under Section 10(13A) of the Income Tax Act. The exempt portion is the lowest of three rules — actual HRA, rent minus 10% basic, or 50%/40% basic. Updated 2026.
HRA Exemption Calculator
Tips to maximise HRA exemption
- HRA exemption is the LOWEST of: actual HRA, rent − 10% basic, OR 50%/40% basic
- Metro cities for HRA: Delhi, Mumbai, Kolkata, Chennai (50% of basic). All others get 40%
- Available only under the OLD tax regime — new regime has no HRA exemption
- Rent receipts required for proof. Annual rent above ₹1L needs landlord's PAN
- You can claim HRA even if you pay rent to your parents — they must declare it as income in their ITR
- If you own a house in your work city but live in rented, you can still claim HRA — provided you don't live in the owned house
Watch-outs
- •If you pay zero rent, HRA is fully taxable — declaration doesn't help
- •Spouse can't pay rent to you for HRA exemption (Income Tax Department challenges this)
- •Rent receipts must be in your name and must be paid (bank trail) — not just signed paper
- •Some cities (Bangalore, Hyderabad, Pune) are debatable as 'metro' — IT Department applies 40% rule
- •Switching from old to new regime mid-year? You can switch ONCE per year in your ITR — choose carefully
HRA exemption FAQ
How is HRA exemption calculated?
Under Section 10(13A) read with Rule 2A of Income Tax Rules: the exempt amount is the MINIMUM of three values: (1) Actual HRA received from employer, (2) Rent paid minus 10% of basic salary, (3) 50% of basic if you live in a metro (Delhi/Mumbai/Kolkata/Chennai) or 40% if non-metro. Whichever is lowest is your tax-free HRA — the rest is taxable salary.
Which cities count as metro for HRA?
Per Section 10(13A), only Delhi, Mumbai, Kolkata, and Chennai qualify for the 50% basic exemption. Bangalore, Hyderabad, Pune, Gurgaon, Noida, Ahmedabad — despite being major cities — fall under non-metro and qualify for only 40%. This is a legacy classification that hasn't been updated despite challenges in courts.
Is HRA exemption available under the new tax regime?
No. The new tax regime (default since FY23-24) removes HRA exemption, Section 80C, Section 24(b) interest, and most other deductions in exchange for lower slab rates. If you pay significant rent and have other deductions, the OLD regime + HRA + 80C might give better take-home — compare both regimes annually using your ITR.
Can I claim HRA if I pay rent to my parents?
Yes, but with strict conditions: (1) Your parents must own the property, (2) Rent must be paid via bank transfer with a clear trail, (3) Parents must declare the rent as 'income from house property' in their ITR and pay tax on it (with 30% standard deduction). Done correctly, this is legal and accepted by the IT Department. Done as a shortcut without rent flow + declaration, it's tax evasion.
Do I need rent receipts for HRA?
Yes. Your employer needs rent receipts to compute HRA exemption in TDS. Annual rent above ₹1 lakh requires the landlord's PAN in your rent declaration (Form 12BB). Without rent receipts, your employer must treat the full HRA as taxable salary. You can still claim exemption when filing your ITR — but you need receipts as proof if IT Department scrutinises.
What if I lived in two cities during the year?
Compute HRA exemption month-by-month based on where you lived. If 6 months in Bangalore (40% rule) and 6 months in Mumbai (50% rule), each month uses its own rule. Your CA can split this in your ITR. Most employers handle this via Form 12BB declarations and apply the right percentage per quarter.