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HRA exemption calculator

How much of your house rent allowance is tax-free under the old regime — the three limits side by side, and the one that decides your exemption.

DA counts only if it forms part of your retirement benefits.
The eight: Mumbai, Delhi, Kolkata, Chennai, Bengaluru, Hyderabad, Pune and Ahmedabad.
HRA exempt from tax—
Exempt per year—
Taxable HRA—
Taxable HRA per year—
Rent at which the full limit is used—
The three limits, per monthAmount
1 · HRA actually received
—
2 · Rent paid minus 10% of basic + DA
—
3 · 50% of basic + DA
—

HRA is exempt only under the old tax regime. Under the new regime the whole allowance is taxable.

Educational tool with simplified assumptions. Returns are not guaranteed; actual results will differ. This is not investment, tax or legal advice.

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How it works

The maths, in plain English.

The rule. The exempt part of HRA is the lowest of three amounts: the HRA you actually receive; the rent you pay minus 10% of salary; and 50% of salary if the rented home is in one of eight cities, or 40% anywhere else. Salary here means basic pay, plus dearness allowance if it counts for retirement benefits, plus commission paid as a fixed percentage of turnover. Whatever is not exempt is taxed as salary.

Eight cities from FY 2026-27. The Income-tax Rules, 2026 — notified by the CBDT on 20 March 2026 and in force from 1 April 2026 — added Bengaluru, Hyderabad, Pune and Ahmedabad to Mumbai, Delhi, Kolkata and Chennai. Until FY 2025-26 only those four metros qualified for the 50% limit; everyone else was at 40%. [VERIFY] The rule and Schedule numbers under the new law (reported as Rule 279 of the 2026 Rules and Schedule III of the Income-tax Act, 2025) should be checked against the gazette text before being quoted.

Only in the old regime. The new regime does not allow the HRA exemption, so this calculation matters only if you choose the old regime. Compare both in the regime calculator, entering the yearly exemption from this page.

Month by month. The law applies the test for the period in which the home is rented. If your salary, HRA, rent or city changed during the year, run the calculator for each stretch and add the results.

Assumptions. You actually pay the rent, do not own the home you live in, and hold rent receipts or a rent agreement. Employers ask for the landlord's PAN when yearly rent exceeds ₹1 lakh [VERIFY] under the 2026 forms. The separate deduction for people who pay rent but receive no HRA (section 80GG of the 1961 Act — new section number [VERIFY]) is not covered.

Sources (checked 19 Sep 2026). EY tax alert, Income-tax Rules 2026, notified 20 Mar 2026 · Upstox, final Income-tax Rules 2026 — HRA, Mar 2026 · ClearTax, Income Tax Rules 2026 summary

Questions

FAQ

Is Hyderabad a metro city for HRA in FY 2026-27?
Yes. From 1 April 2026 the Income-tax Rules, 2026 put Hyderabad, Bengaluru, Pune and Ahmedabad alongside Mumbai, Delhi, Kolkata and Chennai, so the third limit is 50% of salary instead of 40% for rented homes in these eight cities.
How is HRA exemption calculated?
It is the lowest of three figures: actual HRA received, rent paid minus 10% of basic salary plus DA, and 50% of basic plus DA in the eight listed cities (40% elsewhere). For example, with basic of ₹50,000, HRA of ₹25,000 and rent of ₹20,000 in Hyderabad, the three figures are ₹25,000, ₹15,000 and ₹25,000, so ₹15,000 a month is exempt and ₹10,000 is taxable.
Can I claim HRA in the new tax regime?
No. The HRA exemption is available only under the old regime. Under the new regime the full HRA is taxed as salary.
Can I claim HRA if I pay rent to my parents?
The law does not bar it, provided the arrangement is genuine: your parents own the home, you actually pay rent (preferably by bank transfer under a written agreement), and they report the rent in their own returns. Rent paid to a spouse is commonly challenged.
What if I pay rent but do not receive HRA?
The HRA exemption does not apply, but the 1961 Act allowed a separate deduction under section 80GG in the old regime — the least of ₹5,000 a month, 25% of total income, or rent minus 10% of total income. The corresponding section number in the Income-tax Act, 2025 should be verified before filing.
Which limit usually decides the exemption?
For most tenants it is rent minus 10% of salary. The calculator marks the binding limit and shows the rent at which the full limit would be used; paying more rent than that does not increase the exemption.
Do I need rent receipts?
Yes. Employers need proof of rent before allowing the exemption in TDS, and the landlord's PAN when the yearly rent crosses ₹1 lakh. Keep the rent agreement and payment records in case the return is questioned.

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