HRA Exemption Calculator: find your exact exempt amount — and the lever that raises it
First, the rule that decides everything: HRA exemption exists only in the old regime. Under the new (default) regime the entire allowance is taxable — so this calculator is really two decisions in one: how much of your HRA escapes tax, and whether that saving is large enough to make the old regime worth choosing at all. 2026 also brought the first real change to the metro rules in years — from FY 2026-27, eight cities qualify for the 50% limit, with Bengaluru, Hyderabad, Pune and Ahmedabad joining the original four.
Compute your exempt HRA — and see which limb is holding it down
"Salary" here means basic + DA (where it forms part of retirement benefits) + turnover-linked commission. Indicative computation — confirm before filing.
Worked example — how the least-of-three plays out
Basic + DA ₹8,00,000; HRA received ₹3,20,000; rent paid ₹3,00,000 in Mumbai (metro):
| Limb | Computation | Amount |
|---|---|---|
| (a) HRA received | As per salary structure | ₹3,20,000 |
| (b) Rent − 10% of salary | ₹3,00,000 − ₹80,000 | ₹2,20,000 ← least |
| (c) 50% of salary (metro) | 50% × ₹8,00,000 | ₹4,00,000 |
Exempt HRA is ₹2,20,000; the remaining ₹1,00,000 of HRA stays taxable. The binding limb here is rent — which is exactly the lever: every extra rupee of genuine, documented rent (up to the point another limb takes over) adds a rupee of exemption.
Which cities count as metro?
| Period | 50% (metro) cities |
|---|---|
| AY 2026-27 return (income year 2025-26) | Delhi, Mumbai, Kolkata, Chennai |
| From FY 2026-27 (Income-tax Rules, 2026) | Delhi, Mumbai, Kolkata, Chennai + Bengaluru, Hyderabad, Pune, Ahmedabad |
Everywhere else — including Thane, Navi Mumbai and Gurgaon — remains at 40%. The exemption flows from section 10(13A) read with Rule 2A of the 1961 regime, carried into section 11 of the Income-tax Act, 2025 with its exemption schedule.
The levers that legitimately raise your exemption
- Pay rent you can prove. Receipts, a rent agreement, and bank transfers — cash trails collapse in scrutiny. Landlord PAN is needed once rent crosses ₹1 lakh a year.
- Family-rent arrangements work only when real. Paying a parent rent is accepted where the money actually moves and the parent offers it as income in their return. Rent to a spouse is litigation-prone — avoid it.
- Watch the 194-IB trigger. Monthly rent above ₹50,000 means you must deduct 2% TDS and file Form 26QC — our TDS-on-rent guide walks through it.
- HRA and home-loan interest can coexist where the facts support it — owning in one city while renting in another for work is the classic case. Keep the evidence of why.
- HRA-light salary structure? If the 50/40% limb is far above what you receive, there is headroom — worth raising at your next compensation review.
Keep reading
- HRA in 2026: the full metro-cities rule change, with payslip-level examples
- TDS on rent: 194-I vs 194-IB rates, limits and Form 26QC
- Old vs new regime: break-even guide with worked examples
- Advance Tax Calculator: instalments and 234B/234C interest
- ITR filing hub AY 2026-27: forms, regimes and deadlines
Frequently asked questions
Is HRA exempt under the new tax regime?
No. HRA exemption is available only in the old regime. The new (default) regime taxes the entire allowance but applies lower slab rates — high rent in a metro city is one of the few situations where the old regime still wins, so compare both on your actual numbers.
Which cities count as metro for the 50% limit?
For the AY 2026-27 return (income year 2025-26): Delhi, Mumbai, Kolkata and Chennai. From FY 2026-27, the Income-tax Rules, 2026 extend the 50% limit to eight cities — adding Bengaluru, Hyderabad, Pune and Ahmedabad. All other cities, including Thane and Navi Mumbai, use 40%.
What does "salary" mean in the HRA formula?
Basic salary plus dearness allowance (where it forms part of retirement benefits) plus commission as a fixed percentage of turnover. Other allowances and perquisites are excluded — so the 50/40% and 10%-of-salary limbs are computed on a narrower base than your CTC.
Can I pay rent to my parents and claim HRA?
Yes, where the arrangement is genuine: the money actually moves to the parent, ideally by bank transfer, and the parent offers the rent as income in their return. Rent paid to a spouse is litigation-prone — steer clear of it. Disclose family-landlord arrangements accurately if the ITR utility asks.
When do I need the landlord’s PAN, and when does TDS apply on my rent?
Your employer needs the landlord’s PAN once rent exceeds ₹1 lakh a year. Separately, if your monthly rent exceeds ₹50,000, you must deduct TDS at 2% under Section 194-IB and file Form 26QC — this applies to you as the tenant, even as a salaried individual.
Can I claim both HRA and home-loan deductions?
Yes, where the facts support it — the classic case is owning a house in one city (claiming the interest deduction) while living on rent in another city for work. Keep evidence of the work reason and both money trails; claiming both for the same city and period invites questions.
We compare both regimes on your actual numbers, paper the rent trail correctly, and file — one workflow, no scrutiny surprises.
Income Tax FilingTDS Return FilingTalk to usGeneral guidance based on the metro-list and HRA rules as covered in our 2026 guides. HRA exemption applies in the old regime only; computations are indicative — confirm your regime choice and figures with us before filing.