How much House Rent Allowance is tax-exempt under the old regime, using the least-of-three rule. All amounts are annual.
Exempt HRA
₹1,80,000.00
House Rent Allowance is not exempt in full — Section 10(13A) grants exemption equal to the least of three amounts, and the whole game is knowing which of the three is limiting you. The three candidates are the actual HRA in your salary, the rent you pay minus 10% of salary, and a flat 50% of salary in the eight metro cities (40% elsewhere). Whichever is smallest becomes your exemption; the rest of the HRA is taxable. Because the rule takes a minimum, adding more of any one component only helps up to the point where a different condition takes over.
Take the calculator’s default: a Mumbai employee with basic salary (plus DA) of ₹6,00,000 a year, receiving ₹3,00,000 of HRA and paying ₹2,40,000 in annual rent. The three candidates come out as ₹3,00,000 (actual HRA), ₹1,80,000 (rent of ₹2,40,000 minus 10% of salary, ₹60,000), and ₹3,00,000 (50% of a ₹6,00,000 salary in a metro). The least is ₹1,80,000, so that much HRA is exempt and the remaining ₹1,20,000 is added to taxable income. Notice the “rent − 10% of salary” term is doing the work here, as it does for most people — the actual-HRA and percentage caps are usually the generous ones.
The exemption exists only under the old tax regime. Under the new regime — now the default — HRA is fully taxable, which is precisely why high-rent employees are often the ones for whom the old regime still wins. A ₹1,80,000 exemption at a 30% marginal rate is roughly ₹54,000 of tax saved a year, and that saving has to be weighed against the new regime’s lower slab rates and ₹75,000 standard deduction. The old vs new regime breakeven guide works through where the line falls, and the salary calculator shows your take-home under the new regime for comparison. Keep rent receipts (and your landlord’s PAN if annual rent tops ₹1 lakh) — the exemption is only as good as the proof behind it.
HRA exemption is the least of three amounts: (1) actual HRA received, (2) rent paid minus 10% of salary, and (3) 50% of salary in metro cities or 40% in non-metro cities. Salary here means basic pay plus dearness allowance that forms part of salary.
From FY 2026-27, eight cities qualify for the 50% limit: Delhi, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Pune, and Ahmedabad. All other cities use 40%. Note that for FY 2025-26 income (returns filed in 2026), the old four-city list — Delhi, Mumbai, Kolkata, Chennai — still applies.
No. The HRA exemption is available only under the old tax regime. If you opt for the new regime you cannot claim it, which is one factor in the regime decision.
Yes. To claim HRA you generally need rent receipts, and your landlord’s PAN if annual rent exceeds ₹1 lakh.
For most salaried people this middle condition is the binding one, because actual HRA and the 40–50% cap tend to be generous while rent minus 10% of salary is smaller. It is worth checking: if your rent is very high relative to salary, the 40%/50% cap becomes the limit instead.
Yes, if the arrangement is genuine — your parents must actually own the home and declare the rent as income, and you should keep receipts and ideally a bank trail. Paying rent to a spouse is generally not accepted by the tax department.
Yes, in valid situations — for example you rent in the city you work in while owning (and repaying a loan on) a house elsewhere, or your own home is genuinely not occupiable for work reasons. Both the HRA exemption and the home-loan interest deduction can then apply under the old regime.
Then this exemption does not apply. Self-employed people and salaried employees without an HRA component can instead claim a limited deduction for rent under Section 80GG, which has its own, lower limits.
Last reviewed: July 14, 2026
This calculator provides planning estimates based on the assumptions shown on this page.
Planning estimate, not tax advice. Confirm specifics with your employer or a professional.