SalaryDecode

Updated for FY 2026-27

HRA Exemption Calculator (§10(13A), Old Regime)

City you pay rent in

All figures annual — multiply monthly payslip amounts by 12. The exemption applies only under the old tax regime.

Exempt HRA (least of the three below)

₹1,92,000

Taxable HRA: ₹48,000 of ₹2,40,000 received

  1. Actual HRA received₹2,40,000
  2. Rent paid − 10% of basic — the minimum₹1,92,000
  3. 50% of basic (metro)₹2,40,000

Estimate only. Not tax or financial advice. Figures depend on your employer's exact structure — consult a CA for decisions. Updated for FY 2026-27.

How the HRA exemption is calculated

Section 10(13A) of the Income-tax Act, read with Rule 2A, exempts part of the House Rent Allowance your employer pays — but only under the old tax regime, and only if you actually pay rent for the home you live in. The exempt amount is the least of three figures:

  1. Actual HRA received from your employer for the year;
  2. Rent paid minus 10% of basic salary (never less than zero);
  3. 50% of basic salary if you rent in Delhi, Mumbai, Kolkata, or Chennai — 40% anywhere else.

Whatever is left of your HRA after the exemption is taxed as ordinary salary. Most calculators print only the final answer; this one shows all three limbs side by side and highlights the one that binds, because the binding limb is what tells you which lever actually moves your exemption. If limb 2 binds, the exemption grows rupee-for-rupee with rent; if limb 1 or 3 binds, paying more rent changes nothing. "Basic salary" here means basic pay plus dearness allowance that counts for retirement benefits, if your structure has DA — most private-sector structures do not.

Worked example 1 — the common case (limb 2 binds)

Annual basic ₹4,80,000, HRA received ₹2,40,000, rent ₹2,40,000 (₹20,000 a month) in Mumbai, a metro. The three limbs: actual HRA is ₹2,40,000; rent minus 10% of basic is ₹2,40,000 − ₹48,000 = ₹1,92,000; 50% of basic is ₹2,40,000. The least is ₹1,92,000 — exempt. The remaining ₹48,000 of HRA is taxable. Notice the arithmetic quirk: whenever rent equals HRA received, limb 2 is automatically the smallest, and exactly 10% of basic stays taxable.

Worked example 2 — non-metro, high rent (limb 3 binds)

Same salary — basic ₹4,80,000, HRA ₹2,40,000 — but rent of ₹3,00,000 a year (₹25,000 a month) in Bengaluru, which is non-metro for this rule. The limbs: actual HRA ₹2,40,000; rent minus 10% of basic is ₹3,00,000 − ₹48,000 = ₹2,52,000; 40% of basic is ₹1,92,000. The 40% cap binds, and exempt HRA is ₹1,92,000. Paying even higher rent would change nothing here — the cap is already the ceiling — but a restructure that raises basic would lift limb 3 directly.

Worked example 3 — rent below 10% of basic (exemption is zero)

Basic ₹4,80,000, HRA ₹2,40,000, but rent of only ₹40,000 a year — say a shared arrangement at about ₹3,300 a month. Limb 2 is ₹40,000 − ₹48,000, which is negative and floors at zero. The least of ₹2,40,000, ₹0, and ₹2,40,000 is ₹0: no exemption at all, and the entire ₹2,40,000 of HRA is taxable. This is the edge case that catches people with low rent and high basic — receiving HRA is not enough; the rent itself must exceed 10% of basic before a single rupee becomes exempt.

What to keep in order before claiming

The exemption is claimed through your employer (declare rent in the investment-proof cycle so TDS is computed on the exempt figure) or directly in your return, but the paperwork rules are the same either way: rent receipts or bank transfers evidencing actual payment, a rent agreement for larger amounts, the landlord's PAN once annual rent crosses ₹1,00,000, and TDS under §194-IB once monthly rent crosses ₹50,000. Cash rent with no trail is the classic reason an otherwise valid claim fails in scrutiny. If your employer pays no HRA at all but you still pay rent, §10(13A) does not apply — the smaller §80GG deduction is the relevant provision instead.

Because the exemption exists only under the old regime, the real question for FY 2026-27 is whether old-regime-with-HRA beats the new regime's lower slabs for your numbers. Our in-hand salary calculator computes both regimes with your rent applied, and the CTC offer comparison lets you put an old-regime structure against a new-regime one side by side. Like every tool on this site, this calculator runs entirely in your browser — your salary and rent figures are never transmitted or stored anywhere. Nothing here is tax advice: the tool shows what Rule 2A's arithmetic produces for the numbers you enter.

Frequently asked questions

Can I claim HRA exemption under the new tax regime?
No. The §10(13A) HRA exemption is available only under the old tax regime. The new regime — the default for FY 2026-27 — taxes your full HRA along with the rest of your salary, in exchange for lower slab rates and the larger §87A rebate. Whether the old regime with HRA (and your other deductions) beats the new regime depends on your total numbers; running both regimes through our in-hand salary calculator shows the comparison directly.
Which cities count as metro for the 50% HRA limit?
Only four: Delhi, Mumbai, Kolkata, and Chennai. Bengaluru, Hyderabad, Pune, Gurugram, Noida, and every other city are non-metro for this rule, capped at 40% of basic — regardless of how expensive they are. The list comes from Rule 2A of the Income-tax Rules and has not been expanded, which regularly surprises people paying Bengaluru rents.
Can I pay rent to my parents and claim HRA exemption?
The law does not prohibit paying rent to a parent who owns the house, and tribunals have allowed it where the arrangement is genuine: actual bank transfers of rent, a rent agreement, and the parent declaring the rent as income in their own return. Sham arrangements — no payments, or rent for a house you co-own — have been disallowed in assessments. You cannot claim HRA for rent paid to a spouse, and you cannot claim it for a house you own yourself.
Do I need my landlord’s PAN to claim HRA exemption?
If your annual rent exceeds ₹1,00,000, your employer must collect the landlord’s PAN (or a declaration that the landlord has none) before allowing the exemption in TDS. Separately, monthly rent above ₹50,000 requires you to deduct TDS under §194-IB. Below the ₹1 lakh threshold, rent receipts are generally sufficient for the employer, though the assessing officer can still ask for proof that rent was actually paid.
Why is my HRA exemption zero even though I receive HRA and pay rent?
Almost always because your rent does not exceed 10% of your basic salary. The second limb of the formula is rent paid minus 10% of basic — if annual rent is ₹40,000 against a basic of ₹4,80,000, that limb is ₹40,000 − ₹48,000, which floors at zero, and the least of the three limbs is therefore zero. The exemption is also zero if you pay no rent at all or live in your own house, however large the HRA component in your CTC.
Is the HRA exemption calculated monthly or annually?
Strictly, the comparison is done for each period in which the three inputs are constant — so if your basic, HRA, rent, or city changes mid-year, the year splits into parts and each part is computed separately, then summed. If nothing changed all year, the annual calculation this tool performs gives the same answer as twelve identical monthly ones. For a year with a mid-year rent hike or a city move, run each period through the calculator separately with that period’s annual-equivalent figures.

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