How to calculate your HRA exemption
- Enter your monthly basic salary and the HRA your employer pays.
- Enter the rent you pay each month and choose the city you live in.
- Add dearness allowance if it counts towards your retirement benefits.
- Read your tax-free and taxable HRA, and which of the three limits applies.
- Use the tax-free HRA in the old regime on the income tax calculator.
HRA exemption formula
The tax-free part of your HRA is the least of:
- The HRA you actually receive.
- Rent paid minus 10% of salary (basic + DA).
- 50% of salary in the eight notified cities, 40% anywhere else.
Whatever is left over is taxable and added to your salary income.
HRA metro cities from 2026
The Income-tax Rules, 2026 extend the 50% limit to four more cities from tax year 2026-27 (the return you file in 2027):
| Limit | Cities |
|---|---|
| 50% of salary | Delhi, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Pune, Ahmedabad |
| 40% of salary | All other cities and towns |
For FY 2025-26 returns, Bengaluru, Hyderabad, Pune and Ahmedabad still use the 40% limit.
HRA calculation example
Priya lives in Bengaluru. Her basic salary is ₹50,000 a month, her HRA is ₹20,000 and she pays ₹18,000 rent. For the year:
| Limit | Amount |
|---|---|
| HRA you receive | ₹2,40,000 |
| Rent paid minus 10% of salary (lowest) | ₹1,56,000 |
| 50% of salary | ₹3,00,000 |
Her tax-free HRA is ₹1,56,000 and ₹84,000 is taxable. Raising her rent to ₹25,000 a month would make her whole HRA tax-free.
Documents you need
- Rent receipts or a rent agreement for the months you claim.
- Your landlord's PAN if annual rent is over ₹1 lakh.
- Proof of payment, ideally bank transfers rather than cash.
Then compare regimes on the income tax calculator and see your take-home pay on the salary calculator.
Frequently asked questions
How is HRA exemption calculated?
The exempt amount is the lowest of three figures: the HRA you actually receive; the rent you pay minus 10% of your salary; and 50% of salary if you live in one of the eight notified cities, or 40% elsewhere. Salary here means basic pay plus dearness allowance that counts for retirement benefits.
Which cities get the 50% HRA limit from 2026?
From tax year 2026-27, the Income-tax Rules, 2026 apply the 50% limit to eight cities: Delhi, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Pune and Ahmedabad. All other cities use 40%. For FY 2025-26 returns, only the original four metros get 50%.
Can I claim HRA in the new tax regime?
No. HRA exemption is available only in the old regime. In the new regime the whole HRA is taxable, so compare both regimes before deciding.
Do I need my landlord's PAN to claim HRA?
Your employer will ask for your landlord's PAN if the rent you pay is more than ₹1 lakh a year. Keep rent receipts or a rent agreement as proof either way.
Can I claim HRA if I pay rent to my parents?
Yes, if you genuinely pay rent to a parent who owns the house, with proper receipts or bank transfers, and your parent shows the rent as income in their own return. You cannot claim HRA for rent paid to your spouse.
What if I don't get HRA from my employer?
Without HRA in your salary you cannot claim this exemption, but self-employed people and employees without HRA may be able to claim a separate deduction for rent in the old regime, subject to its own limits.
Can I claim both HRA and a home loan deduction?
Yes, in the old regime, if you live in a rented house and own a house elsewhere, for example in another city or one that is let out. You need to be able to justify both.