What is HRA exemption?
House rent allowance is the part of a salary meant to cover rent. If you live in rented accommodation and choose the old tax regime, part or all of your HRA is exempt from income tax, under a three-limit rule that depends on your salary, the rent you pay and the city you live in.
This calculator applies that rule for FY 2026-27 or FY 2025-26, including the four cities newly added to the 50% list. It shows each of the three limits, highlights the lowest, and gives the exempt and taxable HRA for the year. Enter the exempt figure in the income tax calculator to compare regimes.
How to use the HRA Exemption Calculator
1.Pick the year and city
Choose the financial year and whether you rent in one of the 50% cities.
2.Enter monthly figures
Your basic salary, dearness allowance if it counts for retirement benefits, HRA received and rent paid.
3.Read the exemption
The lowest of the three limits is tax-free; the rest of your HRA is taxable.
Example: renting in Bengaluru, FY 2026-27
Basic ₹50,000 a month, HRA ₹20,000 a month, rent ₹20,000 a month, so yearly salary ₹6,00,000:
- HRA received
- ₹2,40,000
- Rent − 10% of salary
- ₹2,40,000 − ₹60,000 = ₹1,80,000
- 50% of salary
- ₹3,00,000
- Exempt (the lowest)
- ₹1,80,000
- Taxable HRA
- ₹60,000
Here the rent-minus-10% limit binds, so paying more rent, up to ₹3 lakh a year, would raise the exemption; a higher HRA alone wouldn't.
The three-limit rule
The exempt HRA is the lowest of three amounts: the HRA you actually received; the rent you paid minus 10% of salary; and 50% of salary if you rent in a listed city, 40% elsewhere. Salary here means basic pay plus dearness allowance that counts for retirement benefits.
From FY 2026-27 the Income-tax Rules, 2026 list eight 50% cities: Delhi, Mumbai, Kolkata and Chennai, plus Bengaluru, Hyderabad, Pune and Ahmedabad. For FY 2025-26 only the first four qualify. HRA exemption is available only under the old regime.
Frequently asked questions
Is HRA exempt under the new regime?
No. HRA is fully taxable under the new regime; the exemption needs the old regime.
Is Bengaluru a metro for HRA?
From FY 2026-27, yes: Bengaluru, Hyderabad, Pune and Ahmedabad were added to the 50% list. For FY 2025-26 they count as 40% cities.
Does the office city or the rented home count?
The city where your rented home is.
Can I claim HRA if I pay rent to my parents?
Yes, if you actually pay them rent, they own the house and they declare the rent as income. Rent paid to a spouse is often challenged by tax officers.
Do I need my landlord's PAN?
Employers ask for it when rent is above ₹1 lakh a year.
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