HRA exemption rules
If you live in rented accommodation and receive HRA, the least of the following is exempt from tax under section 10(13A): (1) the HRA you actually receive, (2) rent paid minus 10% of basic salary, and (3) 50% of basic if you live in a metro, or 40% of basic otherwise. The three amounts are worked out for the months you paid that rent.
The metro list changed. Until FY 2025-26 only Delhi, Mumbai, Kolkata and Chennai counted. From FY 2026-27, under the Income-tax Rules 2026, Bengaluru, Hyderabad, Pune and Ahmedabad were added. Use the financial-year switch to match the return you are filing.
Documents you need
Give your employer rent receipts or a rent agreement. If your rent is more than ₹1 lakh in the year (about ₹8,333 a month), you must also give your landlord’s PAN. If the landlord has no PAN, a declaration is needed. If you did not submit proof on time, you can still claim the exemption when you file your return.
Which tax regime?
HRA exemption is available only in the old tax regime. The new regime gives no HRA exemption, but it has lower slab rates and a higher standard deduction. The salary calculator compares both regimes with your HRA, so you can see which leaves you with more money.
Frequently asked questions
Can I claim HRA in the new tax regime?
No. HRA exemption is available only under the old tax regime.
Is my city a metro for HRA?
For FY 2026-27 the 50% limit applies to Delhi, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Pune and Ahmedabad. For FY 2025-26 only the first four counted. The test is the city where you live and work, not your office address. Confirm with your employer if your city is on the border of one of these.
Can I claim HRA if I live with my parents?
Yes, if you actually pay them rent, they declare it as income in their return, and you can prove the payment, for example through bank transfers. A rent agreement helps.
Can I claim HRA and home-loan interest together?
Yes, if the home you own is in a different city, or you live elsewhere for work. If you live in a house you own, you cannot claim HRA for it.
What if I get no HRA but pay rent?
Section 80GG lets you claim a deduction for rent in the old regime even without HRA, up to ₹5,000 a month, subject to conditions. The limit is the least of ₹5,000 a month, rent minus 10% of income, and 25% of income.
Does HRA count towards the 50% wages rule for gratuity?
HRA is not part of basic or DA. Under the new labour codes, “wages” for gratuity can include more than basic, so check the gratuity calculator.