How is HRA exemption calculated in India?

HRA exemption under Section 10(13A) is the minimum of three amounts: (1) Actual HRA received from employer, (2) Rent paid minus 10% of Basic Salary + DA, (3) 50% of Basic + DA for metro cities or 40% for non-metro cities. The exempt amount is deducted from taxable salary. Only available under the Old Tax Regime.

Which cities qualify for 50% HRA exemption in 2026?

As per Budget 2026 and the new Income Tax Rules effective April 2026, 8 cities qualify for 50% HRA exemption: Mumbai, Delhi, Kolkata, Chennai, Bengaluru, Pune, Hyderabad, and Ahmedabad. Previously only the first 4 were classified as metros. All other cities get 40%.

Can I claim HRA exemption under the New Tax Regime?

No. HRA exemption under Section 10(13A) is available only under the Old Tax Regime. If you opt for the New Tax Regime, your entire HRA is fully taxable. This is one of the key trade-offs when choosing between regimes - use our Income Tax Calculator to compare both.

Can I pay rent to my parents and claim HRA?

Yes, you can pay rent to your parents and claim HRA exemption, provided your parents own the property. You need a valid rental agreement, rent receipts, and the rent must be actually paid (bank transfer preferred). Your parents must declare this rental income in their ITR. You cannot claim HRA if you pay rent to your spouse.

What is the ideal rent to pay for maximum HRA exemption?

The ideal rent is the amount where all three HRA exemption limits converge, giving you the maximum possible tax benefit. This calculator computes it automatically. Generally, the ideal rent is approximately equal to your HRA component plus 10% of your basic salary, but the exact amount depends on your salary structure and city.

What is Section 80GG and when should I use it?

Section 80GG allows tax deduction for rent paid when HRA is not part of your salary (common for self-employed or employees without HRA component). The deduction is the least of: ₹5,000 per month, 25% of total income, or rent paid minus 10% of total income. You must not own a house in the city of employment to claim this.

Is PAN of landlord mandatory for HRA exemption?

If your annual rent exceeds ₹1,00,000, providing the landlord's PAN is mandatory while filing ITR. For rent above ₹50,000 per month, TDS at 5% must be deducted under Section 194-IB. Keep rent receipts, rental agreement, and bank transfer proof for all HRA claims.

HRA Calculator India 2026

Calculate your HRA exemption under Section 10(13A) instantly. Updated for Budget 2026 with 8 metro cities including Bengaluru, Pune, Hyderabad and Ahmedabad. See your ideal rent, exempt vs taxable HRA, and how much you lose by choosing the New Tax Regime.

Need to compare Old vs New regime? Use our Income Tax Calculator →

Enter Your Salary & Rent Details

Monthly Basic Salary

₹

Monthly DA

₹

Usually 0 for private sector

Monthly HRA Received

₹

Monthly Rent Paid

₹

Must actually pay rent to claim

City of Residence

Budget 2026: 4 new cities added to 50% bracket

Your Annual HRA Exemption

₹0

Least of 3 amounts under Section 10(13A)

Actual HRA (Annual)

₹0

Rent - 10% Salary

₹0

50% of Salary

₹0

Taxable HRA

₹0

Ideal rent: To maximize your HRA exemption, your monthly rent should be at least ₹0/month. You are currently .

Old Regime

₹0 saved

HRA exempt under Sec 10(13A)

New Regime

₹0 saved

HRA fully taxable-no exemption

Compare Old vs New Regime → Check Your Salary Breakup →

Disclaimer: This HRA calculator provides estimates based on Section 10(13A) of the Income Tax Act and Rule 2A. Actual exemption depends on employer policies, rent receipts, and landlord PAN compliance. HRA exemption is only available under the Old Tax Regime. Tax laws are subject to change. Consult a qualified Chartered Accountant for tax filing.

HRA Calculator Example - Metro vs Non-Metro

Let us walk through two real HRA calculation examples using this HRA calculator. To understand how Basic + DA is determined from your CTC, use the Salary Breakup Calculator.

Example 1: Rajesh in Bengaluru (New Metro-50%)

                        Basic + DA: ₹60,000/month | HRA received: ₹24,000/month | Rent paid: ₹22,000/month

                        Limit 1: Actual HRA = ₹24,000 × 12 = ₹2,88,000

                        Limit 2: Rent - 10% salary = (₹22,000 - ₹6,000) × 12 = ₹1,92,000

                        Limit 3: 50% of salary = ₹30,000 × 12 = ₹3,60,000

                        Exempt HRA = ₹1,92,000 (lowest). Taxable HRA = ₹2,88,000 - ₹1,92,000 = ₹96,000.

                        At 30% slab, this exemption saves Rajesh approximately ₹59,904 in taxes.

Note: Before Budget 2026, Bengaluru was non-metro (40%). Rajesh's Limit 3 would have been ₹2,88,000-same exemption in this case. But for higher salaries, the 50% upgrade makes a real difference.

Example 2: Priya in Jaipur (Non-Metro-40%)

                        Basic + DA: ₹40,000/month | HRA received: ₹16,000/month | Rent paid: ₹12,000/month

                        Limit 1: ₹16,000 × 12 = ₹1,92,000

                        Limit 2: (₹12,000 - ₹4,000) × 12 = ₹96,000

                        Limit 3: 40% × ₹40,000 × 12 = ₹1,92,000

                        Exempt HRA = ₹96,000 (lowest). Taxable HRA = ₹96,000.

5 Common HRA Exemption Mistakes

These mistakes cause thousands of Indians to either overclaim (risky) or underclaim (lose money) on their HRA exemption every year.

Using CTC instead of Basic + DA: HRA exemption uses only Basic + DA as the salary base. Not CTC, not gross salary. Check your breakdown with the Salary Breakup Calculator.
Claiming HRA under New Tax Regime: HRA exemption is only available under the Old Tax Regime. If you chose New Regime, your entire HRA is taxable. Use the Income Tax Calculator to compare both regimes.
No rent receipts above ₹1 lakh/year: If annual rent exceeds ₹1 lakh, landlord's PAN is mandatory. Missing this can lead to the entire HRA exemption being disallowed in scrutiny.
Paying rent to spouse: You cannot claim HRA for rent paid to your spouse. However, you can pay rent to parents if they own the property. They must declare the rental income in their ITR.
Including maintenance in rent: Only actual rent qualifies. Maintenance charges, HOA fees, and parking charges are excluded from the HRA calculation.

HRA Exemption vs Section 80GG - Which One Applies to You?

Not everyone gets HRA as a salary component. If your employer does not provide HRA, you can still claim tax benefit on rent under Section 80GG. Here is how they compare:

Feature	Section 10(13A) - HRA	Section 80GG
Who can claim	Salaried with HRA component	Salaried without HRA / Self-employed
Maximum	No fixed cap (formula-based)	₹5,000/month (₹60,000/year)
Conditions	Must pay rent, have receipts	Must not own house in same city, file Form 10BA
Tax regime	Old Regime only	Old Regime only
Formula	Least of 3 amounts	Least of: ₹5K/mo, 25% of income, rent - 10% income

If you are self-employed or your employer doesn't give HRA, Section 80GG is your route. The ₹5,000/month cap is much lower than typical HRA exemptions, which makes the Old vs New regime decision more nuanced. Run the numbers in our Income Tax Calculator.

Budget 2026 - 8 Metro Cities for HRA

The new Income Tax Rules 2026 (effective April 2026) expand the metro city list for HRA exemption from 4 to 8 cities:

City	HRA %	Status
Mumbai	50%	Original metro
Delhi	50%	Original metro
Chennai	50%	Original metro
Kolkata	50%	Original metro
Bengaluru	50%	New in Budget 2026
Pune	50%	New in Budget 2026
Hyderabad	50%	New in Budget 2026
Ahmedabad	50%	New in Budget 2026
All other cities	40%	Non-metro

This means employees in Bengaluru, Pune, Hyderabad and Ahmedabad now get a 25% higher HRA exemption limit (50% vs 40% of salary). This HRA calculator already includes these 4 new cities in the metro option.

Paying Rent to Parents - Rules for HRA Exemption

One of the most searched HRA exemption scenarios in India. Yes, you can pay rent to your parents and claim HRA, but follow these rules strictly:

Your parents must own the property (not just live there)
You need a valid rental agreement between you and your parent
Rent must be actually paid-bank transfer is preferred for audit trail
Your parents must declare this rental income in their ITR
If your parent's total income is below taxable limit, they pay ₹0 tax on the rent-making it a zero-sum tax saving strategy for the family
You cannot pay rent to your spouse-this is explicitly disallowed

Pro tip: If your parent is a senior citizen with total income below ₹3 lakh (Old Regime) or ₹5 lakh (New Regime), the rent you pay them is effectively tax-free for them. Meanwhile, you save tax on the HRA exemption. This is one of the most powerful legal tax-saving strategies available to Indian families. Use our Income Tax Calculator to simulate both your and your parent's tax impact.

Documents Required for HRA Exemption

Keep these ready for your employer (Form 12BB) and ITR filing:

Rent receipts-monthly, signed by landlord, with revenue stamp if rent > ₹5,000/month
Rental agreement-registered or notarized preferred
Landlord PAN-mandatory if annual rent > ₹1,00,000
Bank transfer proof-for amounts paid via NEFT/UPI
Form 12BB-submit to employer for TDS adjustment

If rent exceeds ₹50,000/month, you must deduct TDS at 5% under Section 194-IB and deposit it using Form 26QC. Use the TDS Calculator to compute the exact amount.

Official Sources & References

Official References

Income Tax India-Section 10(13A) & Rule 2A Income Tax Department-HRA Calculator Tool Gazette of India-Income Tax Rules 2026 Draft

Frequently Asked Questions

How is HRA exemption calculated?

The HRA calculator uses the 3-way minimum under Section 10(13A): least of actual HRA received, rent paid minus 10% of Basic + DA, and 50% (metro) or 40% (non-metro) of Basic + DA. Only available under the Old Regime. Use the Salary Breakup Calculator to find your exact Basic + DA.

Which 8 cities get 50% HRA in 2026?

Mumbai, Delhi, Chennai, Kolkata (original 4) plus Bengaluru, Pune, Hyderabad, Ahmedabad (added in Budget 2026). Effective from April 2026. All other cities remain at 40%.

Can I claim HRA under New Tax Regime?

No. HRA exemption is only available under the Old Tax Regime. Choosing New Regime makes your entire HRA taxable. Compare both regimes in our Income Tax Calculator.

Can I pay rent to parents and claim HRA?

Yes, if your parents own the property. You need a rental agreement, rent receipts, and bank transfer proof. Parents must declare rental income. You cannot pay rent to your spouse.

What is the ideal rent for maximum HRA exemption?

This HRA calculator computes your ideal rent automatically. Generally, it equals your HRA component plus 10% of Basic + DA. Paying less than this means you're not utilizing your full HRA exemption.

Is landlord PAN mandatory for HRA?

Yes, if annual rent exceeds ₹1,00,000. For rent above ₹50,000/month, you must also deduct TDS at 5% under Section 194-IB. Use the TDS Calculator for the exact amount.

Can I claim HRA and home loan together?

Yes, if your rented accommodation and owned property are in different cities. You can claim HRA for rent paid and home loan interest under Section 24(b) simultaneously. This is a legitimate and common tax planning strategy.

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