HRA Exemption Calculator

Why HRA trips people up

House Rent Allowance exemption is not a percentage of anything. For FY 2025-26 it sits in section 10(13A) of the 1961 Act; from FY 2026-27 in Schedule III of the Income-tax Act, 2025, read with Rule 279 of the Income-tax Rules, 2026. The formula is the same under both. It is the least of three separate amounts: the HRA your employer actually pays you, half your basic salary if you live in a metro or 40% if you do not, and the rent you paid less 10% of your basic salary. Whichever of those three is smallest is your exemption, and the other two are irrelevant.

That structure is why two people with identical salaries can have wildly different exemptions, and why raising the HRA component of your salary sometimes changes nothing at all. If the third amount is the smallest, the only thing that moves your exemption is the rent you actually pay.

The metro list changed for FY 2026-27

For FY 2025-26, metro means Delhi, Mumbai, Kolkata and Chennai, and that is the complete list. From FY 2026-27, Rule 279 of the Income-tax Rules, 2026 sets the 50% rate for 8 cities: Mumbai, Kolkata, Delhi, Chennai, Hyderabad, Pune, Ahmedabad and Bengaluru. Every other city, including Gurugram and Noida, stays at 40% of basic.

So "is Bengaluru a metro" now has two right answers, and the year decides which. Rent paid in FY 2025-26 is still at 40% in Bengaluru; rent paid from April 2026 is at 50%. Pick the year on the calculator to match the rent, and note that the list has nothing to do with how expensive a city is.

• Metro for HRA in FY 2026-27: Mumbai, Kolkata, Delhi, Chennai, Hyderabad, Pune, Ahmedabad, Bengaluru
• Metro for HRA in FY 2025-26: Delhi, Mumbai, Kolkata, Chennai
• Basic means basic plus dearness allowance where DA enters retirement benefits
• Rent paid less 10% of basic floors at zero - it never becomes negative

It only exists under the old regime

The new tax regime does not permit an HRA exemption at all, so a new-regime taxpayer's exemption is nil no matter how much rent they pay. That is frequently the single largest reason the old regime still wins for someone renting in a city, and it is worth quantifying before you choose a regime rather than after.

What it will not do

It will not generate rent receipts, and it will not tell you that a particular rent figure is safe from scrutiny. We compute the exemption from what you tell us; whether your declaration is supportable depends on receipts, a rent agreement and, above ₹1 lakh a year, your landlord's PAN.

It also does not cover Section 80GG (section 134 of the 2025 Act), the deduction available to someone who pays rent but receives no HRA. That is a different section with a different and much smaller formula, and folding it in here would obscure both.