Short answer
Your HRA exemption is the lowest of three amounts: the HRA you receive, rent paid minus 10% of salary, and 50% of salary in a metro city or 40% elsewhere. Salary here means basic pay plus dearness allowance, when your employment terms provide for it.
From Tax Year 2026-27, eight cities get the 50% rate: Mumbai, Delhi, Kolkata, Chennai, Bengaluru, Hyderabad, Pune and Ahmedabad, under Rule 279 of the Income-tax Rules, 2026. HRA exemption is available only in the old tax regime. For your 2025-26 return, only the original four cities get 50%.
How to use this HRA calculator
- 1Pick the tax yearChoose 2026-27 for your current salary and Form 124 declaration. Choose 2025-26 if you are checking the HRA in last year's return.
- 2Search your cityType your city, including old names like Bombay or Bangalore. The rate that applies, 50% or 40%, shows next to it.
- 3Enter monthly amountsAdd basic salary, DA, HRA and rent from your payslip and rent agreement, and the number of months you lived on rent.
- 4Read the resultYou see the exempt HRA, which of the three limits applied, the taxable HRA, the tax you save, and whether you need your landlord's PAN.
HRA exemption formula
HRA exempt = the lowest of:
- Actual HRA received for the months you lived on rent
- Rent paid minus 10% of salary
- 50% of salary in the eight metro cities, or 40% in any other place
Salary means basic pay plus dearness allowance, if your terms of employment provide for it. Other allowances and perquisites are left out. All three amounts are worked out only for the months you actually lived in the rented home. The rest of your HRA is added to your taxable salary.
If you pay rent that is not more than 10% of your salary, no HRA is exempt. If you live in your own home, the whole HRA is taxable.
HRA metro city list for 2026-27
The 50% rate depends on the city where you live and pay rent, not where your employer is registered. Only the cities named in the rule get 50%. Suburbs and neighbouring cities that are separate municipal areas stay at 40%.
| City | 2026-27 | 2025-26 | Note |
|---|---|---|---|
| Mumbai | 50% | 50% | Metro since the start |
| Delhi | 50% | 50% | Metro since the start |
| Kolkata | 50% | 50% | Metro since the start |
| Chennai | 50% | 50% | Metro since the start |
| Bengaluru | 50% | 40% | Moved up from 40% |
| Hyderabad | 50% | 40% | Moved up from 40% |
| Pune | 50% | 40% | Moved up from 40% |
| Ahmedabad | 50% | 40% | Moved up from 40% |
| Gurugram | 40% | 40% | Separate city from Delhi |
| Noida / Greater Noida | 40% | 40% | Separate city from Delhi |
| Ghaziabad | 40% | 40% | Separate city from Delhi |
| Faridabad | 40% | 40% | Separate city from Delhi |
| Thane | 40% | 40% | Separate city from Mumbai |
| Navi Mumbai | 40% | 40% | Separate city from Mumbai |
| Pimpri-Chinchwad | 40% | 40% | Separate city from Pune |
| Nagpur | 40% | 40% | Not named in Rule 279 |
| Nashik | 40% | 40% | Not named in Rule 279 |
| Chhatrapati Sambhajinagar | 40% | 40% | Not named in Rule 279 |
| Kolhapur | 40% | 40% | Not named in Rule 279 |
| Solapur | 40% | 40% | Not named in Rule 279 |
| Surat | 40% | 40% | Not named in Rule 279 |
| Vadodara | 40% | 40% | Not named in Rule 279 |
| Jaipur | 40% | 40% | Not named in Rule 279 |
| Lucknow | 40% | 40% | Not named in Rule 279 |
| Chandigarh / Mohali | 40% | 40% | Not named in Rule 279 |
| Indore | 40% | 40% | Not named in Rule 279 |
| Bhopal | 40% | 40% | Not named in Rule 279 |
| Kochi | 40% | 40% | Not named in Rule 279 |
| Thiruvananthapuram | 40% | 40% | Not named in Rule 279 |
| Coimbatore | 40% | 40% | Not named in Rule 279 |
| Mysuru | 40% | 40% | Not named in Rule 279 |
| Visakhapatnam | 40% | 40% | Not named in Rule 279 |
| Bhubaneswar | 40% | 40% | Not named in Rule 279 |
| Goa | 40% | 40% | Not named in Rule 279 |
| Any other city or town | 40% | 40% | All places not named in the rule |
What changed in HRA from 1 April 2026?
The Income-tax Act, 2025 and the Income-tax Rules, 2026 apply to salary earned from 1 April 2026. The HRA formula is the same, but the section numbers, the city list and the declaration form have changed.
- Four more cities at 50%. Bengaluru, Hyderabad, Pune and Ahmedabad move from 40% to 50% under Rule 279, which replaces Rule 2A.
- New law reference. The exemption moved from Section 10(13A) to Schedule III, Table Sl. No. 11, read with Section 11 of the Income-tax Act, 2025.
- Form 124 replaces Form 12BB. You declare rent to your employer in Form 124, under Section 392(5)(b) read with Rule 205. It asks for your relationship with the landlord.
- No change for last year. Your 2025-26 return still follows Section 10(13A) and Rule 2A, so the four new cities stay at 40% for that year.
| Item | 1961 Act (up to 2025-26) | 2025 Act (from 2026-27) |
|---|---|---|
| HRA exemption | Section 10(13A) | Schedule III, Table Sl. No. 11 with Section 11 |
| Limits and metro cities | Rule 2A · 4 cities | Rule 279 · 8 cities |
| Rent declaration to employer | Form 12BB | Form 124 |
| Rent deduction without HRA | Section 80GG · Form 10BA | Section 134 |
| TDS on rent by an individual | Section 194-IB · Form 26QC | Section 393(1), Table Sl. No. 2(i) · Form 141 |
| New tax regime | Section 115BAC | Section 202 |
How HRA exemption is calculated: three worked examples
Basic ₹60,000, HRA ₹30,000 and rent ₹35,000 a month for 12 months. Salary for the year is ₹7,20,000. The three limits are HRA of ₹3,60,000, rent minus 10% of salary of ₹3,48,000, and 50% of salary of ₹3,60,000.
Exempt HRA ₹3,48,000 · taxable HRA ₹12,000
For 2025-26, Pune was at 40%, so the cap was ₹2,88,000. The new rate adds ₹60,000 of exemption, worth ₹18,720 at the 30% slab with cess.
Basic ₹40,000, HRA ₹16,000 and rent ₹15,000 a month, paid to her mother who owns the flat. The limits are ₹1,92,000, ₹1,32,000 and 40% of salary of ₹1,92,000.
Exempt HRA ₹1,32,000 · taxable HRA ₹60,000
Rent is ₹1,80,000 a year, above ₹1 lakh, so the mother's PAN is needed. She must show the rent as income in her return.
Total income ₹6,00,000 and rent ₹12,000 a month. The limits are ₹60,000 (₹5,000 a month), ₹1,50,000 (25% of income) and ₹84,000 (rent minus 10% of income).
Rent deduction ₹60,000
Documents you need to claim HRA
- Rent receipts or bank proof. Keep receipts with the landlord's name, address, amount and period, especially when rent is above ₹3,000 a month. Paying by UPI or bank transfer gives the strongest proof.
- Rent agreement. Employers and the tax department ask for it more often now. The Rules also allow documents such as the rent agreement to be attached with claims.
- Landlord's PAN. Required when your rent is above ₹1 lakh a year. If the landlord has no PAN, get a signed declaration from the landlord with their name and address.
- Form 124. Give it to your employer so the exemption is applied in your monthly TDS. If you missed it, you can still claim the exemption in your return with proof.
Paying more than ₹50,000 a month in rent? As an individual, you must deduct 2% TDS from the rent and pay it through Form 141 using your PAN, under Section 393(1), Table Sl. No. 2(i). You do not need a TAN.
Pay rent but get no HRA? Claim Section 134
Self-employed people, and employees whose salary has no HRA, can deduct rent under Section 134 of the Income-tax Act, 2025 (earlier Section 80GG). It is available only in the old regime, and only if you, your spouse or minor child do not own a home in the city where you live or work.
Rent deduction = the lowest of:
- ₹5,000 a month (₹60,000 a year)
- 25% of total income
- Rent paid minus 10% of total income
Total income here is after all other deductions, before this one, and leaves out long-term capital gains and short-term gains on listed shares. Switch the calculator to "Rent without HRA" to work it out.
Frequently asked questions
How is HRA exemption calculated for 2026-27?
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It is the lowest of three amounts: the HRA you receive, rent paid minus 10% of salary, and 50% of salary in Mumbai, Delhi, Kolkata, Chennai, Bengaluru, Hyderabad, Pune or Ahmedabad, or 40% anywhere else. Salary is basic pay plus DA when your employment terms provide for it. This comes from Schedule III, Table Sl. No. 11 of the Income-tax Act, 2025 read with Rule 279 of the Income-tax Rules, 2026.
Which cities get 50% HRA exemption from 2026-27?
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Eight cities: Mumbai, Delhi, Kolkata and Chennai, plus Bengaluru, Hyderabad, Pune and Ahmedabad, which were added by Rule 279 of the Income-tax Rules, 2026. Every other place is at 40%. The change applies to salary for Tax Year 2026-27 onwards.
Is Pune a metro city for HRA?
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Yes, from Tax Year 2026-27. Pune employees can use 50% of salary as the city cap. For the 2025-26 return, Pune is still at 40%, because that year follows Section 10(13A) and Rule 2A of the 1961 rules.
Are Gurugram, Noida, Thane and Navi Mumbai metro cities for HRA?
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No. The 50% rate applies only to the cities named in Rule 279. Gurugram, Noida, Ghaziabad, Faridabad, Thane, Navi Mumbai and Pimpri-Chinchwad are separate cities, so the 40% cap applies even though they are close to a metro.
Can I claim HRA exemption in the new tax regime?
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No. HRA exemption is available only in the old tax regime. The new regime under Section 202 of the Income-tax Act, 2025 (earlier Section 115BAC) is the default, so you must choose the old regime to claim it. Compare both with an income tax calculator before you decide.
What is the section for HRA under the Income-tax Act, 2025?
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Schedule III, Table Sl. No. 11, read with Section 11 of the Income-tax Act, 2025, which replaced Section 10(13A) from 1 April 2026. The limits and the city list are in Rule 279 of the Income-tax Rules, 2026, which replaced Rule 2A.
Do I need my landlord's PAN to claim HRA?
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Yes, when the rent you pay is above ₹1 lakh a year. Give the landlord's PAN to your employer with your rent declaration. If the landlord has no PAN, a signed declaration from the landlord is needed instead.
What is Form 124 for HRA?
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Form 124 replaces Form 12BB from 1 April 2026. You use it to declare rent, home loan interest and investments to your employer, under Section 392(5)(b) read with Rule 205. For HRA it asks for the landlord's details and your relationship with the landlord.
Can I pay rent to my parents and claim HRA?
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Yes, if your parent owns the home, the rent is actually paid, ideally by bank transfer, and your parent shows it as income in their return. You must disclose the relationship in Form 124. Rent paid to a spouse does not qualify.
Can I claim HRA and home loan interest together?
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Yes, when the house you own is in another city, or is let out, and you actually live on rent where you work. Keep proof of both the rent and the loan. Claiming both for the same city needs a genuine reason, such as the owned house being too far from your workplace.
I pay rent but get no HRA. What can I claim?
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Section 134 of the Income-tax Act, 2025 (earlier Section 80GG). You can deduct the lowest of ₹5,000 a month, 25% of total income, or rent minus 10% of total income. It is for the old regime only, and not if you, your spouse or minor child own a home in the city where you live or work.
Do I have to deduct TDS on the rent I pay?
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Only if your rent is more than ₹50,000 a month. Then deduct 2% and pay it through Form 141 using your PAN, under Section 393(1), Table Sl. No. 2(i) of the Income-tax Act, 2025 (earlier Section 194-IB). You do not need a TAN.
Is HRA fully exempt from tax?
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Rarely. Only the lowest of the three limits is exempt, and the balance is taxed as salary. HRA is fully taxable if you live in your own home, pay no rent, or choose the new tax regime.