How to calculate HRA exemption (8 cities at 50%)
Updated: 14 November 2026
An educational illustration, not financial, tax or investment advice. Figures are estimates from the formula shown. Your bank, fund house or the official scheme rules decide the actual amount.
Open the HRA exemption calculator
HRA exemption is the lowest of three amounts: the HRA you actually receive, the rent you pay minus 10% of salary, and 50% or 40% of salary depending on the city. Salary here means basic pay plus DA. From 1 April 2026, under the Income-tax Rules, 2026, eight cities qualify for the 50% limit.
Quick answer
- Exempt HRA = the least of: HRA received; rent − 10% of (basic + DA); 50% or 40% of (basic + DA).
- 50% cities from 1 April 2026: Mumbai, Delhi, Kolkata, Chennai, Bengaluru, Hyderabad, Pune and Ahmedabad. Everywhere else: 40%.
- HRA exemption is available only in the old tax regime.
- Give your landlord’s PAN if rent in the tax year is more than ₹1,00,000.
The three limits
| Limit | Formula |
|---|---|
| 1. HRA received | The HRA in your salary |
| 2. Rent minus 10% of salary | Rent paid − 10% × (basic + DA) |
| 3. City limit | 50% × (basic + DA) in the eight cities, otherwise 40% |
Whatever is lowest is tax-free. The rest of your HRA is taxable.
Worked examples (yearly figures)
Basic + DA ₹6,00,000, HRA received ₹2,40,000.
| City and rent | HRA received | Rent − 10% | City limit | Exempt |
|---|---|---|---|---|
| Bengaluru, rent ₹2,40,000 | ₹2,40,000 | ₹1,80,000 | ₹3,00,000 (50%) | ₹1,80,000 |
| Bengaluru, rent ₹3,60,000 | ₹2,40,000 | ₹3,00,000 | ₹3,00,000 (50%) | ₹2,40,000 |
| Mysuru, rent ₹3,60,000 | ₹2,40,000 | ₹3,00,000 | ₹2,40,000 (40%) | ₹2,40,000 |
In the first case ₹60,000 of HRA is taxable. Paying more rent raises limit 2, but the exemption can never be more than the HRA you receive.
What changed in 2026
Until March 2026 only four metros (Mumbai, Delhi, Kolkata and Chennai) got 50%. Rule 279 of the Income-tax Rules, 2026 adds Bengaluru, Hyderabad, Pune and Ahmedabad from 1 April 2026.
Proof your employer will ask for
- Rent receipts or a rent agreement. You can make receipts with the rent receipt generator.
- The landlord’s PAN if yearly rent is more than ₹1,00,000.
- The declaration form, now Form 124 (formerly 12BB). See Form 124, HRA and rent receipts.
Old or new regime?
The new regime has no HRA exemption. Compare both with the income tax calculator before choosing.
How to use the HRA calculator
- Choose monthly or yearly amounts.
- Enter basic + DA, the HRA you receive and the rent you pay.
- Pick your city and read the exempt amount and which limit applied.
Limits
Not tax advice. Self-employed people and employees without HRA have a different rent deduction, not covered here. The Income-tax Rules and your employer’s payroll decide.
Sources
- HRA exemption calculator: least of three limits
- Income-tax Rules, 2026, rule 279: least of three, 50% in eight cities
- Income Tax Department: Form 124 FAQ (landlord PAN above ₹1,00,000 rent)
If this page and the official notice disagree, follow the notice.
FAQ
How is HRA exemption calculated?
Which cities get 50% HRA from April 2026?
Can I claim HRA in the new tax regime?
When do I need my landlord’s PAN?
Is Bengaluru a metro for HRA now?
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