Last Updated: June 2026 — FY 2025-26 (AY 2026-27)
House Rent Allowance (HRA) is a component of your salary that helps reduce your tax liability if you are living in a rented house. HRA exemption is available only under the Old Tax Regime.
HRA Exemption Calculation – How It Works
The HRA exemption is the minimum of the following three amounts:
- Actual HRA received from employer
- Actual rent paid minus 10% of basic salary
- 50% of basic salary (if metro city: Delhi, Mumbai, Kolkata, Chennai) or 40% (non-metro)
HRA Exemption Example (FY 2025-26)
- Basic Salary: Rs. 60,000/month (Rs. 7,20,000/year)
- HRA Received: Rs. 24,000/month (Rs. 2,88,000/year)
- Rent Paid: Rs. 20,000/month (Rs. 2,40,000/year) – Delhi (metro)
| Condition | Amount |
|---|---|
| Actual HRA received | Rs. 2,88,000 |
| Rent paid – 10% of basic (Rs. 2,40,000 – Rs. 72,000) | Rs. 1,68,000 |
| 50% of basic salary (metro) | Rs. 3,60,000 |
| HRA Exemption (minimum of above) | Rs. 1,68,000 |
Important Rules for HRA Claim
- Must be actually living in a rented house (not owned)
- If annual rent exceeds Rs. 1 lakh, landlord’s PAN is mandatory
- Keep rent receipts as proof
- You cannot claim both HRA and home loan interest for the same city unless circumstances justify it
- HRA cannot be claimed under the New Tax Regime