HRA exemption · Taxable HRA · Tax saved · Section 10(13A) three-condition rule · FY 2026-27
Disclaimer: HRA exemption is calculated as per Section 10(13A) of the Income Tax Act for FY 2026-27. The least of the three conditions is exempt. DA is included only if it forms part of salary for retirement benefit purposes. Section 80GG is available only to those who do not receive HRA and file Form 10BA. Results are estimates — consult a tax advisor for your exact liability.
HRA (House Rent Allowance) exemption under Section 10(13A) of the Income Tax Act is the least of three amounts — whichever is smallest becomes your tax-free HRA. This exemption is available only under the Old Tax Regime; the New Regime does not allow it.
Exempt HRA is whichever of these three amounts is smallest:
| Condition | Formula |
|---|---|
| ① Actual HRA Received | HRA component on your payslip × 12 |
| ② City-based % of salary | 50% of (Basic + DA) in metro cities · 40% in non-metro cities |
| ③ Rent paid minus 10% of salary | Annual Rent Paid − 10% of (Basic + DA) |
Inputs: Basic + DA = ₹50,000 | HRA Received = ₹20,000 | Rent Paid = ₹18,000 | City = Metro
Condition ③ (rent-linked) is the binding constraint here, which is the case for most salaried employees paying moderate rent relative to their basic salary — this is exactly why the calculator above lets you test how a higher rent or basic salary shifts which condition becomes the limiting factor.
Required by your employer to process HRA exemption in TDS. Keep monthly rent receipts as proof if your return is scrutinized later.
Mandatory if total annual rent exceeds ₹1,00,000. If the landlord has no PAN, a declaration from them is required instead.
HRA is fully taxable if you don't actually pay rent — exemption requires a genuine rent payment, not just receiving the HRA component.
Allowed, provided rent is genuinely transferred and the recipient declares it as rental income. Cannot claim HRA if you live in a self/jointly-owned house.
Self-employed individuals, freelancers, or salaried employees whose salary structure doesn't include an HRA component can still claim a rent deduction under Section 80GG — the least of three different amounts:
| Condition | Amount |
|---|---|
| ① Flat annual limit | ₹60,000/year (₹5,000/month) |
| ② % of total income | 25% of total income |
| ③ Rent-linked | Rent paid − 10% of total income |
HRA exemption is the least of three amounts: (1) actual HRA received, (2) 50% of Basic+DA for metro cities or 40% for non-metro cities, and (3) rent paid minus 10% of Basic+DA. Whichever of these three is the smallest becomes your exempt HRA for the year; the remainder is added to your taxable salary.
Only Mumbai, Delhi, Kolkata, and Chennai qualify for the 50% of Basic+DA rule. Every other city in India — including Bengaluru, Hyderabad, Pune, and Ahmedabad — falls under the 40% non-metro rule. Classification is based on where you actually reside and pay rent, not your employer's registered office location.
No. If you do not pay rent — for example, if you live in your own house or with parents rent-free — the entire HRA received from your employer is fully taxable. Exemption under Section 10(13A) requires an actual, demonstrable rent payment.
Yes, if your total annual rent payment exceeds ₹1,00,000. In that case, you must provide your landlord's PAN to your employer. If the landlord does not have a PAN, a signed declaration from them is required instead, as per CBDT rules.
Yes, this is allowed provided the rent is genuinely paid (ideally via bank transfer, with receipts) and your parents declare it as rental income in their own tax return. You cannot, however, claim HRA exemption if you live in a house you own yourself, or jointly own with your spouse.
No. HRA exemption under Section 10(13A) is available only under the Old Tax Regime. If you opt for the New Tax Regime, your entire HRA is added to taxable salary regardless of rent paid. This is one of the key factors to weigh when comparing regimes if you pay significant rent.
You can claim a deduction under Section 80GG instead — the least of ₹60,000/year, 25% of total income, or rent paid minus 10% of total income. This requires filing Form 10BA and confirming that neither you nor your spouse/minor child owns residential property at your place of work or residence.
Only if DA forms part of salary for retirement benefit purposes, which is typically the case for government and PSU employees but rarely for private-sector employees. If your DA does not count toward retirement benefits, it should be excluded and only Basic Salary used for the computation.
Yes, in specific situations — for example, if you own a house in one city (and claim home loan interest deduction on it under Section 24b) but live and pay rent in a different city for work, you can claim both HRA exemption and home loan interest deduction simultaneously, since the home loan is on a property you do not currently occupy.
This depends on your Basic+DA, HRA received, and city type — there is no single number that applies to everyone. A rent optimiser tool can find the exact minimum monthly rent needed to fully exhaust your HRA exemption, and how much additional tax could be saved by paying slightly more.
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