HRA exemption is available only in the old tax regime. In the new (default) regime the whole HRA is taxable.
From tax year 2026-27 the 50% limit covers eight cities: Mumbai, Delhi, Kolkata, Chennai, Bengaluru, Hyderabad, Pune and Ahmedabad.
If annual rent exceeds ₹1 lakh, your employer needs the landlord’s PAN.
This is an estimate based on published rates, not tax or financial advice. Your payslip or assessment may differ. We are an independent site, not affiliated with any government agency.
The three-way rule
The tax-free HRA is the lowest of:
the HRA actually received;
rent paid minus 10% of basic + DA;
50% of basic + DA in Mumbai, Delhi, Kolkata, Chennai, Bengaluru, Hyderabad, Pune or Ahmedabad, or 40% elsewhere.
Worked example
Basic ₹50,000, HRA ₹20,000, rent ₹18,000 a month, Bengaluru
Rent minus 10% of basic is ₹2,16,000 − ₹60,000 = ₹1,56,000 a year, which is lower than the HRA received (₹2,40,000) and 50% of basic (₹3,00,000). So ₹1,56,000 is tax-free and the rest is taxed as salary.
HRA exempt per year₹1,56,000₹13,000 a month
Taxable HRA per year
₹84,000
The exemption is the lowest of three amounts
Actual HRA received
₹2,40,000
Rent paid minus 10% of basic + DA
₹1,56,000
50% of basic + DA
₹3,00,000
Tips
Paying rent to parents is allowed if they own the house and declare the rent as income; you cannot pay rent to your spouse.
No HRA in your salary? Self-employed people and employees without HRA can claim a separate deduction for rent under the old regime, with its own lower limits.
Compare regimes: a large HRA exemption is often what makes the old regime worthwhile – check with the income tax calculator.
Questions people ask
How is HRA exemption calculated?
It is the lowest of the HRA you actually receive, the rent you pay minus 10% of basic + DA, and 50% of basic + DA (40% outside the eight listed cities).
Which cities get the 50% limit from 2026-27?
Mumbai, Delhi, Kolkata, Chennai, Bengaluru, Hyderabad, Pune and Ahmedabad under the Income-tax Rules, 2026. Before that only the first four counted.
Can I claim HRA in the new tax regime?
No. The HRA exemption is available only in the old regime; in the new regime your whole HRA is taxed.
Do I need my landlord's PAN?
Yes, if the rent you pay is more than ₹1 lakh a year. Give the PAN and rent receipts to your employer.
This is an estimate based on published rates, not tax or financial advice. Your payslip or assessment may differ. We are an independent site, not affiliated with any government agency. Read the full disclaimer.
