HRA Exemption: How to Save Tax on Your Rent
If you're salaried and pay rent, part of your House Rent Allowance is tax-free. Here's exactly how the exemption is worked out, the metro rule that catches people out, and the one regime it's available in.
Work out my tax →HRA exemption under Section 10(13A) makes part of your House Rent Allowance tax-free if you live in rented accommodation. The exempt amount is the least of three figures — and like most allowances, it's available only under the old tax regime.
HRA Exemption Calculator
Your exempt HRA is the least of three figures. Enter your monthly numbers and we’ll show you the exempt amount, the taxable balance, and exactly which cap is limiting you.
Metro = Delhi, Mumbai, Kolkata, Chennai only. Bengaluru, Hyderabad, Pune and all other cities count as non-metro (40%).
Least of these three (per month)
Lowest figure wins → 40% of salary
HRA exemption applies only under the old tax regime and needs rent proof (and the landlord’s PAN if annual rent exceeds ₹1 lakh). This calculator is general information, not tax advice — confirm with a qualified CA.
Exemption = the least of these three
Your HRA exemption is whichever of these comes out smallest. Everything above it is taxable salary.
Actual HRA received
The total House Rent Allowance your employer actually paid you in the year.
50% or 40% of salary
50% of your basic + DA if you live in a metro city, or 40% if you don't.
Rent − 10% of salary
The actual rent you paid, minus 10% of your basic + DA for the year.
“Salary” here means basic pay plus dearness allowance (and commission if it's a fixed percentage of turnover) — not your whole CTC.
A worked example
Take someone in a non-metro city with basic + DA of ₹6,00,000, HRA of ₹2,40,000, paying rent of ₹2,40,000 a year.
So ₹1,30,000 of the HRA is tax-free, and the remaining ₹1,10,000 is taxed as salary. Change the city to a metro and figure 2 jumps to 50%, often raising the exemption.
Metro vs non-metro
The 50%-or-40% figure hinges on whether your city is a “metro” — and for HRA, only four cities qualify.
Metro cities
Only Delhi, Mumbai, Kolkata and Chennai count as metros for HRA.
Everywhere else
Every other city is non-metro — including Bengaluru, Hyderabad, Pune and Gurugram.
This catches people out: despite their size, Bengaluru and Hyderabad are not metros for HRA, so the 40% figure applies there.
The conditions that apply
You must actually pay rent
HRA is exempt only if you live in rented accommodation and genuinely pay the rent — keep receipts and proof of payment.
Landlord's PAN over ₹1 lakh
If your annual rent exceeds ₹1,00,000, you must report your landlord's PAN to your employer.
Rent to parents can count
Paying rent to a parent who owns the home can qualify — but it must be real, paid, and declared by them as income.
HRA and a home loan together
You can sometimes claim both — for example, renting in your work city while owning a house elsewhere.
No HRA in your salary? If you pay rent but get no HRA — common for the self-employed — you may instead claim a smaller deduction under Section 80GG.
HRA only counts in the old regime
The new regime is the default now, and it drops the HRA exemption along with most allowances. If your rent is high, the HRA exemption alone can tip the maths in favour of the old regime — but only your own numbers can tell.
Maximise your HRA with a CA
Between the three-way maths, the metro rule, rent receipts and the landlord-PAN requirement, HRA is easy to under-claim — or to claim wrongly and invite a query. Send your salary details on WhatsApp and a Chartered Accountant computes it correctly and files for you.
Claim my HRA correctlyHRA exemption — FAQs
How is HRA exemption calculated?
It's the least of three amounts: the actual HRA received; 50% of basic + DA in a metro (40% elsewhere); and the rent paid minus 10% of basic + DA. The smallest of these is exempt, the rest is taxable.
Is HRA exempt under the new tax regime?
No. The HRA exemption is available only under the old regime. The new regime, which is the default, removes it along with most allowances.
Which cities are metros for HRA?
Only Delhi, Mumbai, Kolkata and Chennai. All other cities — including Bengaluru, Hyderabad and Pune — are treated as non-metro, where the 40% figure applies.
Can I claim HRA if I pay rent to my parents?
Yes, if it's genuine. The parent must own the home, you must actually pay the rent, and they must declare it as income in their own return.
Do I need my landlord's PAN?
If your annual rent exceeds ₹1,00,000, you must report your landlord's PAN to your employer to claim the exemption.
What if my salary has no HRA component?
If you pay rent but receive no HRA — common for the self-employed — you can claim a deduction under Section 80GG instead, subject to its own limits.
Renting? Don't leave HRA on the table
Send your salary breakup and rent details on WhatsApp — a Chartered Accountant works out your exact HRA exemption, checks the old regime really wins, and files an optimised return.
File with my full HRA claimThis explainer on HRA exemption is for AY 2026-27 (FY 2025-26) and is for general information only — not tax, legal or financial advice. The exemption, its conditions and the metro classification are governed by the Income-tax Act and the rules made under it, and may change. Confirm the current position, or consult a Chartered Accountant, before filing.