| Actual HRA received | ₹3,00,000 |
|---|---|
| Rent paid less 10% of salary | ₹1,80,000 |
| 50% of salary | ₹3,00,000 |
| Exempt: the least of the three | ₹1,80,000 |
| Taxable HRA | ₹1,20,000 |
This is an estimate for planning, not tax, legal or accounting advice. Check figures with a qualified professional before you rely on them.
How it works
If you receive HRA and pay rent, part of the HRA is exempt from tax under the old regime. The exempt amount is the least of three figures: the HRA you actually receive, the rent you pay minus 10% of your salary, and 50% (metro) or 40% (other cities) of your salary. Here salary means basic plus dearness allowance.
The rule sits in the Income-tax Act, 2025 as Schedule III, Table Sl. No. 11 with Rule 279 (was section 10(13A) and Rule 2A). HRA exemption is not available under the new regime. Which cities count as metro for 2026-27 should be confirmed with your employer; this tool does not list them.
Formula notes
- Exempt HRA = least of: (1) HRA received; (2) rent paid − 10% of (basic + DA); (3) 50% of (basic + DA) in a metro, 40% elsewhere.
- If rent paid is less than 10% of salary, the exemption is nil.
- Taxable HRA = HRA received − exempt HRA. Use the exempt amount in the income-tax calculator (old regime).
Sources
- Rule 279, Income-tax Rules 2026 (HRA, Schedule III Table 11)
- Income-tax Act, 2025 in force from 1 April 2026 (PIB)
Estimate, not tax advice. Check figures with a qualified professional before you rely on them.
Common questions
Can I claim HRA under the new regime?
No. The HRA exemption is available only under the old regime.
What if I pay rent to my parents?
You can claim HRA for rent paid to a parent if you actually pay it, with a rent receipt and the landlord's PAN where the rent is above the limit. Check the documentation requirements with your payroll team.
Do I need rent receipts?
Employers ask for rent receipts or a rent agreement as proof, and a landlord PAN above a yearly rent limit. Submit them with your investment declaration.
Apply declarations to TDS automatically
Thoshika Payroll takes employee tax declarations and applies them when it projects TDS. Start a free trial.