Is HRA exemption available in the new regime?

No — the HRA exemption applies under the old tax regime only. If you claim significant HRA, factor it in when comparing the two regimes.

Which cities count as metro for HRA?

Only Delhi, Mumbai, Kolkata and Chennai. Everywhere else — including Bengaluru, Hyderabad and Pune — is treated as non-metro (40% instead of 50%).

What Is HRA Exemption and How Is It Calculated?

Last updated: August 2026

House Rent Allowance (HRA) is part of many salary packages. If you live in rented accommodation, a portion of it can be exempt from tax — but only under the old tax regime.

The "least of three" rule

Your exempt HRA is the smallest of these three:

The actual HRA you receive.
50% of salary (metro) or 40% (non-metro), where salary = Basic + DA.
Rent paid minus 10% of salary.

A worked example

Metro city, Basic+DA ₹50,000/month, HRA ₹20,000/month, rent ₹18,000/month. The three figures are ₹20,000, ₹25,000 and ₹13,000. The smallest — ₹13,000 — is exempt each month, so ₹7,000 of the HRA is taxable.

Good to know

Metro for HRA means only Delhi, Mumbai, Kolkata and Chennai.
Keep rent receipts; report the landlord's PAN if annual rent exceeds ₹1,00,000.
No HRA but paying rent? You may claim a deduction under Section 80GG instead.

Work out your HRA exemptionOpen the calculator →

What Is HRA Exemption and How Is It Calculated?

The "least of three" rule

A worked example

Good to know

Frequently asked questions

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