HRA Exemption Calculator 2026 — Old Tax Regime

HRA (House Rent Allowance) is a salary component paid by employers to help employees meet rental expenses. Under Section 10(13A) of the Income Tax Act, part of HRA can be claimed as tax-exempt. The exemption is the minimum of three amounts: (1) Actual HRA received, (2) Rent paid minus 10% of basic salary, (3) 50% of basic salary for metro cities or 40% for non-metro cities. The remaining HRA is added to your taxable income.

For HRA exemption purposes, only four cities are classified as metro: Delhi, Mumbai, Kolkata, and Chennai. All other cities — including Bangalore, Hyderabad, Pune, Ahmedabad, and Noida — are classified as non-metro. In metro cities, Rule 3 allows 50% of basic salary as exemption, while non-metro cities allow only 40%.

No. HRA exemption under Section 10(13A) is available only under the Old Tax Regime. If you opt for the New Tax Regime (default from FY 2023-24), HRA received is fully taxable. However, the New Regime offers lower slab rates and a higher standard deduction of ₹75,000. Use a tax regime comparator to determine which option saves you more based on your total deductions.

Yes. If your annual rent exceeds ₹1,00,000, you must provide rent receipts and the landlord's PAN number to your employer. For rent below ₹1 lakh, a self-declaration is usually sufficient. If you pay rent to a family member (like a parent), it's still eligible for HRA exemption, but they must declare the rental income in their tax return.

Self-employed individuals cannot claim HRA exemption under Section 10(13A) since they don't receive a salary with an HRA component. However, under Section 80GG of the Income Tax Act, self-employed persons and salaried individuals who don't receive HRA can claim rent deduction up to ₹5,000/month (₹60,000/year). This is subject to conditions like not owning a house in the city of employment.

Yes, it is legally permissible to claim both HRA exemption and home loan interest deduction under Section 24 in certain situations. For example, if you own a house in one city (with an ongoing home loan) but live and work in another city where you pay rent, you can claim both benefits. However, the home you own would be treated as a 'deemed let-out' property and the rental income (actual or notional) would be taxable. Ensure you have proper documentation for both claims.

To claim HRA exemption, you need: (1) Rent receipts with the landlord's signature, revenue stamp (for receipts above ₹5,000), and your name, address, rent amount, and period clearly mentioned. (2) Rent agreement or lease deed. (3) Landlord's PAN if annual rent exceeds ₹1,00,000. (4) Bank statements showing rent payments via transfer (preferred over cash for higher rent amounts). Your employer may require these documents between January-March during the investment declaration window.

If you receive HRA arrears (e.g., due to a salary revision with retrospective effect), the entire amount is taxable in the year of receipt unless you claim relief under Section 89(1). Section 89 provides relief when income that relates to past years is received in the current year, preventing you from being pushed into a higher tax bracket. You need to file Form 10E on the income tax portal before filing your ITR to claim this relief. The exemption calculation is done separately for each year the arrears relate to.

The only difference is in Rule 3 of the three-part HRA exemption formula. For metro cities (Delhi, Mumbai, Kolkata, Chennai), the limit is 50% of basic salary. For all non-metro cities (including major cities like Bangalore, Hyderabad, Pune, and Ahmedabad), the limit is 40% of basic salary. This 10% difference can significantly impact your tax savings — for example, on a basic salary of ₹8 lakh, the metro advantage gives you ₹80,000 more exemption room under Rule 3.

Yes, paying rent to your parents is a popular and fully legal tax-saving strategy. You can pay rent to your father, mother, or any family member (except your spouse) and claim HRA exemption. However, the parent must declare this rental income in their own tax return. If the parent is a senior citizen with income below ₹3 lakh (or ₹5 lakh under new regime), the rental income may be tax-free for them, creating a net tax saving for the family. Ensure rent payments are made via bank transfer for a clear paper trail.

If you live in your own house and do not pay any rent, you cannot claim HRA exemption — the entire HRA received from your employer becomes fully taxable. However, if you own a house in a different city and pay rent where you work, you can still claim HRA. Many employees restructure their salary to reduce the HRA component and increase other tax-free components like LTA or NPS employer contribution if they don't pay rent, thereby optimizing their tax liability under the Old Regime.