HRA Exemption Calculator 2025-26
Find your exact House Rent Allowance tax exemption in seconds. Updated for the new 8-metro-city rule effective from FY 2026-27. Old regime, new regime — compare both instantly.
New for FY 2026-27: Under Income Tax Rules 2026, four more cities — Bengaluru, Hyderabad, Pune & Ahmedabad — now qualify for the 50% HRA exemption (earlier only 40%). For FY 2025-26 ITR filing (due July 2026), the old 4-city rule still applies. Toggle below to see both scenarios.
HRA Calculator — FY 2025-26 / 2026-27
Rule 2A / Section 10(13A)| Parameter | Old Tax Regime | New Tax Regime |
|---|---|---|
| HRA Received | ₹0 | ₹0 |
| HRA Exempt | ₹0 | ₹0 (not allowed) |
| Taxable HRA | ₹0 | ₹0 (fully taxable) |
| Tax on HRA @ 30% slab | ₹0 | ₹0 |
| Annual Tax Saving | ₹0 saved by staying on Old Regime | |
| Month | Basic + DA | HRA Received | Rent Paid | Exempt HRA | Taxable HRA |
|---|
⚡ New Tax Regime Selected
Under the New Tax Regime, HRA exemption under Section 10(13A) is not available. Your entire HRA of ₹0/month will be added to your taxable salary.
Switch to the Old Tax Regime to claim HRA exemption and save taxes. Use the toggle above to compare both scenarios.
What is HRA Exemption? A Complete Guide
House Rent Allowance (HRA) is one of the most powerful tax-saving tools for salaried employees in India. If you pay rent and work in an office, you may be able to reduce your taxable income by ₹1 lakh to ₹5 lakh or more every year — legally and completely.
HRA exemption is governed by Section 10(13A) of the Income Tax Act read with Rule 2A of the Income Tax Rules. The exemption is available only under the old tax regime. Under the new tax regime, the full HRA becomes taxable.
HRA Calculation Formula (Rule 2A)
The exempt amount of HRA is the lowest of the following three values. This is the critical Rule 2A formula that every salaried employee must know:
= 40% × (Basic + DA) → non-metro cities
Note: “Salary” here means Basic Salary + Dearness Allowance (DA) that forms part of salary + any commission based on a fixed percentage of turnover. It does NOT include HRA, special allowances, or other components.
Worked Example — Mumbai Employee, FY 2025-26
Metro vs Non-Metro City Rules — Updated for 2026
The most significant recent change to HRA rules is the expansion of the metro city list from 4 to 8 cities under the Income Tax Rules 2026, effective from FY 2026-27 (April 1, 2026).
| City | FY 2025-26 Rate | FY 2026-27 Rate | Change |
|---|---|---|---|
| Delhi | 50% | 50% | No change |
| Mumbai | 50% | 50% | No change |
| Kolkata | 50% | 50% | No change |
| Chennai | 50% | 50% | No change |
| Bengaluru 🆕 | 40% | 50% | +10% ↑ |
| Hyderabad 🆕 | 40% | 50% | +10% ↑ |
| Pune 🆕 | 40% | 50% | +10% ↑ |
| Ahmedabad 🆕 | 40% | 50% | +10% ↑ |
| All other cities | 40% | 40% | No change |
HRA Exemption Scenarios — Salary Comparison Table
The following table shows how different salary and rent combinations affect HRA exemption across metro and non-metro cities for FY 2025-26.
| Profile | Basic | HRA Received | Rent Paid | Exempt (Metro) | Exempt (Non-Metro) | Extra Saving (30%) |
|---|---|---|---|---|---|---|
| Junior Executive | ₹25,000/m | ₹10,000/m | ₹12,000/m | ₹87,000 | ₹87,000 | — |
| Mid-Level Manager | ₹60,000/m | ₹24,000/m | ₹22,000/m | ₹1,92,000 | ₹1,92,000 | — |
| Senior Professional | ₹1,00,000/m | ₹40,000/m | ₹45,000/m | ₹3,60,000 | ₹3,42,000 | ₹5,400/yr |
| Bengaluru IT Lead (FY27) | ₹1,50,000/m | ₹60,000/m | ₹60,000/m | ₹7,20,000 (50%) | ₹5,94,000 (40%) | ₹~39,312/yr 🆕 |
Documents Needed to Claim HRA
You do not need to submit documents with your ITR, but you must maintain them. Your employer will ask for proof before the financial year ends to process TDS correctly.
Rent above ₹1 lakh/year: PAN of landlord is mandatory
Optional but helpful: Rent agreement, bank transfer statements
₹3,000/month or less: No receipts needed, but keep proof of payment
New in IT Rules 2026: Must disclose relationship between landlord and tenant
5 Expert Tips to Maximise Your HRA Exemption
These strategies are legal, widely used, and can save you significant tax every year:
| # | Tip | Impact |
|---|---|---|
| 1 | Negotiate your salary structure — maximise the HRA component and minimise the special allowance component | High |
| 2 | Pay rent to parents and claim HRA (they report rental income; your exemption is valid) | High |
| 3 | Keep rent receipts for every month — missing even 1 month forfeits that month’s exemption | Medium |
| 4 | If your landlord’s PAN is unavailable, collect Form 60. Submit it to your employer and ITD if asked | Medium |
| 5 | Even if you live with parents who own the property, you CAN pay rent and claim HRA (with proper documentation) | High |
📚 Learn More About HRA & Salary Taxes
Explore our complete guide series — from basics to ITR filing.