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Old Tax Regime Tool

HRA Exemption Calculator

Find out how much of your House Rent Allowance is exempt from tax. Updated for FY 2025-26 and FY 2026-27, including the revised list of metro cities.

Calculation Summary

Enter your details to view the result

Legal Provision for HRA Exemption

House Rent Allowance is a component of salary paid by an employer to meet the cost of rented residential accommodation. The exemption is governed by the following provisions:

PeriodGoverning Provision
Up to FY 2025-26Section 10(13A) of the Income-tax Act, 1961, read with Rule 2A of the Income-tax Rules, 1962
FY 2026-27 onwards (Tax Year 2026-27)Corresponding provision of the Income-tax Act, 2025, read with Rule 279 of the Income-tax Rules, 2026 (which replaces Rule 2A)

Conditions for claiming the exemption:

  • The taxpayer must be a salaried employee receiving HRA as part of salary.
  • The taxpayer must actually pay rent for residential accommodation occupied by them.
  • The accommodation must not be owned by the taxpayer.
  • The taxpayer must opt for the Old Tax Regime. Under the New Tax Regime, the entire HRA is taxable.

How is HRA Exemption Calculated?

The exempt portion of HRA is the least of the following three amounts, computed for the period during which the rented accommodation is occupied:

  1. Actual HRA received from the employer
  2. Actual rent paid minus 10% of salary
  3. 50% of salary for residence in a metro city, or 40% of salary for any other city

For this purpose, salary means Basic Salary + Dearness Allowance (if it forms part of retirement benefits) + Commission based on a fixed percentage of turnover. Other allowances and perquisites are excluded. The balance HRA, after exemption, is taxable under the head "Salaries".

Metro Cities: Year-wise Classification

YearMetro Cities (50% limit)Non-Metro (40% limit)
FY 2025-26Delhi, Mumbai, Kolkata, ChennaiAll other cities, including Bengaluru, Pune, Hyderabad and Ahmedabad
FY 2026-27 onwardsDelhi, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Pune, AhmedabadAll other cities

Key Points to Remember

  • Landlord's PAN: If annual rent exceeds ₹1,00,000, the PAN of the landlord must be furnished to the employer.
  • Declaration form: From FY 2026-27, Form 12BB has been replaced by Form 124, which additionally requires disclosure of the relationship between the landlord and the tenant.
  • No HRA received: Self-employed individuals, or employees who do not receive HRA, may be eligible for a deduction for rent paid under Section 80GG, subject to its conditions.
  • Documentation: Retain rent receipts, the rent agreement and proof of payment (preferably bank transfers) to support the claim in case of scrutiny.

This calculator provides an estimate for general guidance only. Please consult a Chartered Accountant before claiming the exemption, or get your Income Tax Return filed by The Finance Men.

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