Quick answer
How much HRA is exempt from tax?
HRA exemption is the lowest of three amounts: HRA received, rent minus 10% of basic pay, and 50% of basic in a metro (40% elsewhere). With ₹50,000 basic, ₹20,000 HRA and ₹22,000 rent a month in a non-metro city, the exemption is ₹2,04,000 a year, so ₹36,000 of HRA stays taxable.
- 50% cities (2026): Delhi, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Pune, Ahmedabad
- Old regime only; HRA is fully taxable in the new regime
- Landlord PAN needed if rent exceeds ₹1 lakh a year
How does the HRA formula work? A worked example
Basic ₹50,000, HRA ₹20,000 and rent ₹22,000 a month, in a non-metro city. Yearly: basic ₹6,00,000, HRA ₹2,40,000, rent ₹2,64,000.
- Actual HRA: ₹2,40,000
- Rent − 10% of basic: ₹2,64,000 − ₹60,000 = ₹2,04,000
- 40% of basic: ₹2,40,000
The lowest is ₹2,04,000, which is exempt. The remaining ₹36,000 of HRA is taxable.
Which eight cities get the 50% HRA limit in FY 2026-27?
From 1 April 2026, the start of FY 2026-27, the 50% limit applies in Delhi, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Pune and Ahmedabad. Every other city uses 40%.
The city can change your exemption a lot. Take ₹50,000 basic, ₹25,000 HRA and ₹30,000 rent a month:
| Where you live | Salary limit | HRA exempt a year |
|---|---|---|
| One of the eight 50% cities | ₹3,00,000 | ₹3,00,000 (all of it) |
| Any other city | ₹2,40,000 | ₹2,40,000 |
If you moved city, or your rent or salary changed during the year, work out each period separately and add them.
Should you claim HRA under the old or new regime?
HRA exemption is only available under the old tax regime. Under the new regime the whole HRA is taxable, but the slab rates are lower and most deductions fall away. A large HRA exemption can tip the balance towards the old regime, especially in a 50% city with high rent.
Use this HRA calculator to find your exemption, then compare your total tax under both regimes before you choose.
Frequently asked questions
How is HRA exemption calculated?
HRA exemption is the lowest of: the actual HRA you receive; rent paid minus 10% of basic pay plus DA; and 50% of basic plus DA in a metro city (40% elsewhere).
Which cities count as metro for HRA in 2026?
From 1 April 2026, the 50% limit applies in Delhi, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Pune, Ahmedabad. All other cities use 40%.
Can I claim HRA in the new tax regime?
No. HRA exemption is only available under the old tax regime. Under the new regime the whole HRA is taxable, but the slabs are lower.
Can I claim HRA if I pay rent to my parents?
Yes, if you genuinely pay rent and your parent owns the house and shows the rent as income. Keep rent receipts and a rental agreement. The new rules also require you to disclose the relationship with your landlord.
Do I need my landlord’s PAN?
Yes, if the rent you pay is more than ₹1 lakh in a year.
How much HRA is exempt on ₹30,000 rent in a metro?
With ₹50,000 basic and ₹25,000 HRA a month in a 50% city, all three limits come to ₹3,00,000 a year, so the whole HRA is exempt. At ₹15,000 rent, only ₹1,20,000 would be exempt.
Is HRA exemption worked out monthly or yearly?
This calculator uses yearly totals. If your rent, salary or city changed during the year, work out each period separately and add the results.