HRA Exemption Calculator
By Varun M
HRA exemption is the least of three amounts, and the metro-city list just changed for the first time in decades. Pick your financial year, enter your numbers, and see exactly which of the three limits applies to you.
Enter valid (non-negative) figures to see your exemption.
The three limbs — lowest wins
| Actual HRA received | |
| Rent paid − 10% of salary | |
| of salary |
Highlighted row(s) show the binding limit — the lowest of the three.
HRA exemption
per month — per year
Taxable HRA (added to income)
per month — per year
How to use this calculator
Pick the financial year that matches what you're doing — filing FY 2025-26 or planning FY 2026-27, since they run on different metro-city lists. Enter your Basic + DA, HRA received, and rent paid, all monthly (that's how most payslips show them). The calculator shows all three limbs of the exemption formula and highlights which one actually caps your exemption.
The formula, explained
HRA exemption (old regime only) is the least of:
- Actual HRA received
- Rent paid − 10% of salary
- 50% of salary (metro) or 40% of salary (non-metro)
"Salary" here means only Basic + DA (the part forming part of retirement benefits) + commission received as a fixed percentage of turnover — not your gross salary or CTC, and not other allowances or bonuses. This is a narrower definition than most of the other figures on this site use, so don't reuse a CTC or gross-salary figure here.
The metro-city list just changed
For decades, only Delhi, Mumbai, Kolkata, and Chennai counted as "metro" for this calculation. From FY 2026-27 (1 April 2026 onwards), Bengaluru, Hyderabad, Pune, and Ahmedabad were added, taking the list to 8 cities at the 50% rate. If you're filing an FY 2025-26 return, the old 4-city list still applies — these four additions don't apply retroactively. Use the financial-year toggle above to switch between the two.
Worked example — Bengaluru, before and after the change
Basic + DA ₹50,000/month, HRA received ₹25,000/month, rent paid ₹27,000/month, living in Bengaluru:
- FY 2025-26 (Bengaluru = non-metro, old rule): limbs are ₹25,000 / ₹22,000 / ₹20,000 (40% of salary) → exemption = ₹20,000/month (₹2,40,000/year)
- FY 2026-27 (Bengaluru = metro, new rule): limbs are ₹25,000 / ₹22,000 / ₹25,000 (50% of salary) → exemption = ₹22,000/month (₹2,64,000/year)
Same person, same rent, same salary — ₹24,000 a year more exemption purely because Bengaluru was reclassified. This is exactly why the financial-year toggle matters.
Worked example — when rent doesn't clear the 10% threshold
Basic + DA ₹30,000/month, HRA received ₹12,000/month, rent paid ₹10,000/month, non-metro city:
- Limb 1 (actual HRA): ₹12,000
- Limb 2 (rent − 10% of salary): ₹10,000 − ₹3,000 = ₹7,000
- Limb 3 (40% of salary): ₹12,000
The rent-based limb is the lowest here, so exemption is capped at ₹7,000/month (₹84,000/year) — well below the full HRA received, because rent isn't high relative to salary. This is a common outcome for anyone paying relatively low rent.
Documentation you'll need
- Rent receipts for every month you're claiming (mandatory once monthly rent exceeds ₹3,000).
- Your landlord's PAN if your annual rent exceeds ₹1,00,000 — without it, your employer/the tax department can disallow the exemption.
- A rental agreement is strongly recommended even where not strictly mandatory.
- Declare to your employer via Form 124 (which replaced Form 12BB) — it now explicitly asks whether your landlord is a relative.
Old regime only
HRA exemption under this formula is available only if you choose the old tax regime. The new regime doesn't allow it at all — see the Old vs New Tax Regime Calculator for the full picture, including where the "HRA exemption already worked out" field takes the annual figure this calculator gives you.
Situational guides
Worked-out detail for the questions people actually ask, using this calculator's own logic:
- HRA exemption in Bengaluru, Hyderabad, Pune & Ahmedabad — four worked examples showing the metro upgrade doesn't help everyone equally.
- HRA: rent paid to parents — valid if they solely own the property; disqualified if you co-own it.
- HRA exemption without rent receipts — the real thresholds for receipts and landlord PAN, and what to do if you're missing either.
- Section 80GG: rent deduction without HRA — for salaried employees with no HRA component, and the self-employed.
- Claiming HRA and home loan interest together — yes, you can — here's how the numbers work.
FAQ
It's the least of three amounts: (1) actual HRA received, (2) rent paid minus 10% of your salary, and (3) 50% of your salary if you live in a metro city, or 40% if you don't. Whichever of the three is lowest is your exempt amount — the rest of your HRA is taxable.
It depends on the financial year. For FY 2026-27 onwards: Delhi, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Pune, and Ahmedabad (8 cities) — Bengaluru, Hyderabad, Pune, and Ahmedabad were added from 1 April 2026. For FY 2025-26 and earlier, only the original 4 (Delhi, Mumbai, Kolkata, Chennai) count — use the financial-year toggle above to switch.
Only Basic pay + Dearness Allowance (the part forming part of retirement benefits) + commission received as a fixed percentage of turnover. It does NOT mean your gross salary, CTC, or other allowances and bonuses — a narrower definition than most salary figures you'll see elsewhere.
No. HRA exemption is available only under the old tax regime. If you've opted for the new regime, your entire HRA is taxable regardless of rent paid — see the Old vs New Tax Regime Calculator to compare both regimes with your actual numbers.
Rent receipts for every month you're claiming (mandatory once monthly rent exceeds ₹3,000), and your landlord's PAN if your annual rent exceeds ₹1,00,000 — without it, the exemption can be disallowed. You'll declare this to your employer via Form 124 (which replaced Form 12BB), which now also asks you to state whether your landlord is a relative.
Generally yes, provided the arrangement is genuine — a real rental agreement, rent actually paid (ideally via bank transfer), and your parent(s) declaring that rent as their own taxable income. You cannot claim it if you pay rent to a spouse. Given the added landlord-relationship disclosure on Form 124, keep this documentation especially clean.
Formula last verified: 12 Aug 2026
Sources: CBDT Notification No. 22/2026, G.S.R. 198(E), dated 20 Mar 2026 ("Income-tax Rules, 2026", Rule 279) — confirmed via https://www.incometaxindia.gov.in. incometax.gov.in's own help/FAQ pages do not document HRA/metro rules in depth; do not expect to find this there.
This is an indicative estimate. It applies only if you've chosen the old tax regime — the new regime does not allow HRA exemption at all. The metro-city list for FY 2026-27 (8 cities) was corroborated via multiple independent tax-publication sources rather than read directly from the notification's own text, a tooling limitation on our end — reconfirm before relying on it for a large claim. Confirm your exact entitlement and documentation requirements with a qualified tax professional before filing or making financial decisions.