How to Calculate HRA Exemption in India (FY 2026-27)
Quick Answer
HRA exemption is the lowest of three: 1) Actual HRA received, 2) 50% of basic salary (metro) or 40% (non-metro), 3) Actual rent paid minus 10% of basic salary. This exemption is only available under the Old Tax Regime.
What is House Rent Allowance (HRA)?
HRA is a component of your salary provided by your employer to meet the cost of a rented house. While the full HRA is part of your gross salary, a portion of it can be exempt from tax under Section 10(13A) of the Income Tax Act.
Crucial Note: HRA exemption is not available if you choose the New Tax Regime. It is only applicable to those filing under the Old Tax Regime.
The Three-Rule Calculation
The amount of HRA exempt from tax is the minimum of the following three amounts:
- Actual HRA received from your employer.
- 50% of (Basic Salary + DA) if you live in a metro city (Delhi, Mumbai, Kolkata, Chennai); or 40% for non-metros.
- Actual rent paid minus 10% of (Basic Salary + DA).
The remaining HRA (Total HRA - Exempt HRA) is added to your taxable income.
Try the Calculator
Get your exact numbers using our free hra exemption calculator.