How is HRA exemption calculated?

HRA exemption is the minimum of three amounts: (1) Actual HRA received from employer, (2) 50% of basic salary (for metro cities — Mumbai, Delhi, Kolkata, Chennai) or 40% (for non-metro), (3) Actual rent paid minus 10% of basic salary. The exemption reduces your taxable income.

Can I claim HRA if I live in a rented house and pay home loan EMI?

Yes, you can claim both HRA exemption and home loan interest deduction under Section 24(b) simultaneously, provided the rented house where you live is in a different city from the house on which you have a home loan. Both benefits can be claimed together.

Is HRA available under the New Tax Regime?

No. HRA exemption under Section 10(13A) is NOT available under the New Tax Regime from FY 2023-24 onwards. To claim HRA, you must opt for the Old Tax Regime. Under the New Regime, only the standard deduction of ₹75,000 is available for salaried employees.

HRA Exemption Calculator India — HRA Tax Benefit FY 2025-26

HRA Exemption — Complete Guide with Examples

House Rent Allowance (HRA) is a component of salary that is partially or fully exempt from income tax under Section 10(13A) of the Income Tax Act. It is one of the most valuable tax benefits available to salaried employees in India — but only under the old tax regime. Under the new regime, HRA exemption is not available.

The Three-Part Rule

HRA exemption = the minimum of these three amounts:

1.Actual HRA received from employer
2.Rent paid minus 10% of basic salary + DA
3.50% of basic + DA (metro cities) or 40% of basic + DA (non-metro)

Metro vs Non-Metro

Metro cities (where the 50% rule applies): Mumbai, Delhi, Kolkata, Chennai. All other cities — including Hyderabad, Bengaluru, Pune — are non-metro (40% rule). Note: Bengaluru and Hyderabad are not classified as metro for HRA purposes despite being major IT hubs.

Conditions to Claim HRA

✓You must actually be paying rent (not living rent-free)
✓HRA must be a component of your salary structure
✓If annual rent exceeds ₹1,00,000, landlord's PAN is mandatory
✓Rent paid to parents is valid if parents own the property and declare the rental income
✗Cannot claim HRA and home loan interest for the same city simultaneously (without justification)

Self-Employed Professionals

Self-employed individuals cannot claim HRA exemption under Section 10(13A). However, they can claim rent as a business expense under Section 37(1), which reduces business income. Consult a CA for structuring this correctly.

HRA vs Rent-free accommodation

If your employer provides a house instead of HRA, the perquisite is taxed differently. Our CA team can help you understand which option is more tax-efficient for your salary structure. Ask us →