How it works
Enter your monthly basic salary plus dearness allowance, the HRA you receive each month and the rent you pay each month. If you paid rent for only part of the year, change the number of months.
Choose the city you live in and the financial year. From FY 2026-27, Bengaluru, Hyderabad, Pune and Ahmedabad join Delhi, Mumbai, Kolkata and Chennai as cities where the limit is 50% of salary. Everywhere else it is 40%.
The exempt amount is the least of three numbers: the HRA you receive, the rent you pay minus 10% of your salary, and 40% or 50% of your salary. Whatever is left of your HRA is taxable.
The formula
Exempt HRA = the least of (HRA received, rent paid − 10% of salary, 50% or 40% of salary)
Salary here means basic pay plus dearness allowance (and commission that is a fixed percentage of turnover). Allowances such as special allowance usually do not count. Add the three numbers for the months you paid rent.
A worked example
With basic pay of ₹50,000 a month, HRA of ₹25,000 and rent of ₹20,000 in a metro city for 12 months: HRA received is ₹3,00,000, rent minus 10% of salary is ₹1,80,000, and 50% of salary is ₹3,00,000. The least is ₹1,80,000, which is exempt, and ₹1,20,000 of your HRA is taxable.
Frequently asked questions
Can I claim HRA in the new tax regime?
No. HRA exemption is allowed only in the old regime. Use the income tax calculator to see which regime costs you less.
Which cities count as metros?
Delhi, Mumbai, Kolkata and Chennai, and from FY 2026-27 also Bengaluru, Hyderabad, Pune and Ahmedabad. For earlier years only the first four count. Check the rule for the year you are filing.
Do I need rent receipts?
Employers usually ask for rent receipts, and for yearly rent above ₹1,00,000 they ask for the landlord’s PAN. Keep proof of rent paid, such as bank transfers and a rent agreement.
Can I claim HRA if I pay rent to my parents?
Yes, if you really pay rent to them and they show it as income in their return. Pay it through a bank and keep proof.