HRA Exemption Calculator
How much of your house rent allowance is tax-free under the old regime: the least of HRA received, rent minus 10% of salary, and 50% (8 cities) or 40% of salary.
HRA exemption is the least of: HRA received, rent paid minus 10% of salary, and 50% of salary in Delhi, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Pune or Ahmedabad (40% elsewhere). On ₹6 lakh salary, ₹2.4 lakh HRA and ₹3 lakh rent in a metro, ₹2,40,000 is tax-free. Only the old tax regime allows it.
The words on this page, explained simply
New to this? Here is what each term means, in plain English.
- HRA (House Rent Allowance)
- The part of your salary meant for rent. Under the old tax regime, some of it is tax-free if you actually pay rent.
- Salary (for HRA)
- For the HRA rule, salary means basic pay plus dearness allowance if your terms of employment provide for it. Other allowances and perks are left out, so it is not your full pay.
- 50% cities
- From FY 2026-27 the cities where up to 50% of salary can be tax-free HRA: Delhi, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Pune and Ahmedabad. Everywhere else it is 40%.
- Old tax regime
- The older income tax system that allows deductions and exemptions such as 80C and HRA, at higher tax rates. The new regime, the default, has lower rates but few deductions.
- Basic + DA
- Your basic salary plus dearness allowance: two lines on your payslip. PF is usually 12% of this, not of your full salary. Some employers cap it at the wage ceiling: 12% of ₹25,000, i.e. ₹3,000 a month, since 17 September 2026.
If your salary includes house rent allowance (HRA) and you pay rent, part of the HRA can be exempt from tax under the old regime. The exempt part is the smallest of three amounts. Salary here means basic pay plus dearness allowance if your terms of employment provide for it, and excludes all other allowances and perquisites (rule 279 of the Income-tax Rules, 2026).
The three limits
1. The HRA you actually received. 2. Rent paid minus 10% of salary. 3. 50% of salary if you live in one of eight cities, 40% anywhere else. The exemption is the lowest of the three; the rest of the HRA is taxed.
Example: salary ₹6 lakh a year, HRA ₹2.4 lakh, rent ₹3 lakh, living in a metro. Limits: ₹2,40,000; ₹3,00,000 − ₹60,000 = ₹2,40,000; 50% × ₹6,00,000 = ₹3,00,000. Exempt: ₹2,40,000.
The 50% cities from FY 2026-27
Rule 279 of the Income-tax Rules, 2026 lists Mumbai, Kolkata, Delhi, Chennai, Hyderabad, Pune, Ahmedabad and Bengaluru at 50%, and every other place at 40%. The city is where you live, not where your employer is. For FY 2025-26 (returns filed in 2026), the old four-city list applies.
Old regime only
The new tax regime, the default, does not allow the HRA exemption. If you have no HRA in your salary, a separate deduction for rent exists under the old regime, with its own limits; this calculator covers HRA only.
Key takeaways
- Exempt HRA = least of HRA received, rent − 10% of salary, 50%/40% of salary.
- 8 cities at 50% from FY 2026-27: Delhi, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Pune, Ahmedabad.
- Salary = basic + DA (as provided in your terms of employment); no other allowances. Old regime only.
Frequently asked questions
How is HRA exemption calculated?
It is the least of: actual HRA received; rent paid minus 10% of salary; 50% of salary in the eight listed cities or 40% elsewhere. Salary is basic pay plus DA if your terms of employment provide for it, excluding all other allowances and perquisites (rule 279, Income-tax Rules 2026).
Which cities get 50% HRA exemption?
From FY 2026-27 (Income-tax Rules 2026, rule 279): Mumbai, Kolkata, Delhi, Chennai, Hyderabad, Pune, Ahmedabad and Bengaluru. All other places get 40%.
Can I claim HRA in the new tax regime?
No. HRA exemption is available only under the old regime.
What if my rent is less than 10% of salary?
Then the second limit is zero and none of the HRA is exempt.