Work out how much of your House Rent Allowance is tax-free under the old tax regime, including the new 50% limit for eight cities from FY 2026-27.
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How HRA exemption is calculated
The exempt amount is the lowest of:
- The HRA you actually receive.
- Rent paid minus 10% of salary (basic + DA).
- 50% of salary in the eight listed cities, or 40% elsewhere.
Whatever is left of your HRA is taxable.
Which cities get 50%?
| Year | 50% cities |
|---|---|
| FY 2025-26 | Delhi, Mumbai, Kolkata, Chennai |
| FY 2026-27 onwards | Delhi, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Pune, Ahmedabad |
Example
Basic + DA ₹50,000 a month, HRA ₹20,000, rent ₹22,000 in Bengaluru for 12 months. The three figures are ₹2,40,000, ₹2,04,000 and ₹3,00,000, so the exemption is ₹2,04,000 and ₹36,000 of HRA is taxable.
HRA exemption isn’t available under the new tax regime, which is the default. Keep rent receipts and your rental agreement, and give your landlord’s PAN if annual rent is over ₹1 lakh.
Frequently asked questions
Can I claim HRA under the new tax regime?
No. HRA exemption is only available if you choose the old tax regime.
Is Bengaluru a metro city for HRA?
From FY 2026-27, yes: Bengaluru, Hyderabad, Pune and Ahmedabad get the 50% limit.
Can I claim HRA if I pay rent to my parents?
Yes, if you genuinely pay rent and they declare it as income, but you can’t pay rent to your spouse.
What if I don't get HRA from my employer?
You may be able to claim a deduction for rent paid under a separate provision, subject to limits.
Sources
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