Income tax · salaried

HRA Exemption Calculator (FY 2026-27)

HRA exemption calculator for FY 2026-27: least of actual HRA, rent minus 10% of salary, or 50%/40% of salary. Now 50% for 8 cities. Worked example.

Quick answer

HRA exemption = the lowest of (1) actual HRA received, (2) rent paid minus 10% of salary, and (3) 50% of salary in Delhi, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Pune and Ahmedabad, or 40% elsewhere. “Salary” = basic + DA (forming part of retirement benefits).

From tax year 2026-27, the 50% limit covers 8 cities (Income-tax Rules, 2026). HRA exemption is available only under the old tax regime.

Updated 2 October 2026

Worked example

Basic + DA ₹50,000/month (₹6,00,000 a year), HRA received ₹20,000/month (₹2,40,000), rent paid ₹18,000/month (₹2,16,000), living in Pune:

RuleAmount
(1) Actual HRA received₹2,40,000
(2) Rent − 10% of salary (₹2,16,000 − ₹60,000)₹1,56,000
(3) 50% of salary (Pune, from FY 2026-27)₹3,00,000
Exempt HRA = lowest₹1,56,000
Taxable HRA₹84,000

What changed in FY 2026-27

Earlier, only Delhi, Mumbai, Kolkata and Chennai got the 50% limit. The Income-tax Rules, 2026 (notified 20 March 2026 under the Income-tax Act, 2025) add Bengaluru, Hyderabad, Pune and Ahmedabad. In the example above the exemption stays ₹1,56,000 because rule (2) is lowest — the change helps most when you pay high rent relative to salary. For a non-metro city the third limit would be 40% (₹2,40,000).

HRA calculation in Hinglish

HRA ki chhoot teen amounts me se sabse kam wali hoti hai: (1) jitna HRA company deti hai, (2) saal ka kiraya minus basic+DA ka 10%, (3) basic+DA ka 50% (8 bade shehron me) ya 40% (baaki shehron me). Ye chhoot sirf purane tax regime me milti hai. Naye regime me HRA poora taxable hai, lekin wahan slab rates kam hain.

Documents and rules to keep in mind

  • Keep rent receipts and the rent agreement; employers usually ask for proof.
  • Landlord’s PAN is generally required by employers when annual rent exceeds ₹1 lakh.
  • You cannot claim HRA for a house you own and live in, or if you pay no rent.
  • Paying rent to parents is possible if they own the house, actually receive the rent and report it as income.
  • If your employer does not pay HRA, a separate deduction for rent paid may be available under the old regime — check current rules.

Should you choose the old regime for HRA?

HRA exemption alone rarely makes the old regime better. It usually wins only when HRA, home-loan interest, 80C, 80D and NPS deductions together are large. Use the tax pages below to compare.

Frequently Asked Questions

Which cities get 50% HRA exemption from FY 2026-27?

Delhi, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Pune and Ahmedabad (Income-tax Rules, 2026). All other places use 40%.

Is HRA exempt under the new tax regime?

No. HRA exemption is available only if you opt for the old regime.

What is “salary” for HRA?

Basic salary plus dearness allowance (if it forms part of retirement benefits) plus any turnover-based commission. It does not include HRA itself or other allowances.

HRA kaise calculate kare agar rent kam hai?

Agar kiraya basic+DA ke 10% se kam hai to rule (2) zero ho jata hai, aur HRA chhoot bhi zero hogi — poora HRA taxable.

Does the 8-city change apply to my FY 2025-26 return?

No. It applies from tax year 2026-27 (April 2026 onwards). Returns for FY 2025-26 use the earlier rule — 50% only for the four original metros.

Sources