Quick answer
HRA exemption is the lowest of three amounts: (1) actual HRA received, (2) rent paid minus 10% of basic + DA, and (3) 50% of basic + DA in a metro or 40% elsewhere. From FY 2026-27, Bengaluru, Hyderabad, Pune and Ahmedabad count as metros alongside Delhi, Mumbai, Kolkata and Chennai. The exemption is available only in the old tax regime.
Key takeaways
- Only the old regime allows HRA exemption.
- You need rent receipts. If annual rent is above ₹1 lakh, you also need the landlord’s PAN.
- Paying rent to parents is allowed if they actually own the house and declare the rent as income.
HRA exemption formula
Exempt HRA = min( HRA received, Rent − 10% × (Basic + DA), 50% or 40% × (Basic + DA) )Metro cities for HRA (50% rule)
| Financial year | 50% (metro) cities | Everyone else |
|---|---|---|
| FY 2026-27 onward | Delhi, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Pune, Ahmedabad | 40% |
| FY 2025-26 and earlier | Delhi, Mumbai, Kolkata, Chennai | 40% |
Under the Income-tax Rules, 2026, notified with the Income-tax Act, 2025.
Worked example
Basic ₹50,000/month, HRA ₹25,000, rent ₹20,000, living in Bengaluru in FY 2026-27 (annual figures):
- Actual HRA = ₹3,00,000
- Rent − 10% of basic = ₹2,40,000 − ₹60,000 = ₹1,80,000
- 50% of basic = ₹3,00,000
The lowest is ₹1,80,000, which is exempt. The remaining ₹1,20,000 is taxable. In FY 2025-26, rule 3 would have been 40% (₹2,40,000), and the exemption would still be ₹1,80,000.
Frequently asked questions
Is Bengaluru a metro city for HRA?
From FY 2026-27, yes. The Income-tax Rules, 2026 added Bengaluru, Hyderabad, Pune and Ahmedabad to the 50% list. For FY 2025-26 and earlier, only Delhi, Mumbai, Kolkata and Chennai qualified.
Can I claim HRA under the new tax regime?
No. HRA exemption is available only if you choose the old regime.
Can I claim HRA and home loan benefits together?
Yes, if you live in a rented house and your own house is in another city, or is let out or under construction. You need to be able to justify the arrangement.
I don’t get HRA. Can I still claim rent?
Self-employed people, or employees without HRA, can claim a rent deduction under Section 80GG (old regime), up to ₹5,000 a month, subject to conditions.
Sources & methodology
Formulas follow the standard methods used by Indian banks, fund houses and government schemes. Rates and tax rules were checked against official sources on 1 October 2026. Read our methodology.
This calculator gives an estimate for planning purposes. Actual returns, tax and eligibility depend on your situation and on product terms. It is not financial advice.