Salary

HRA Exemption: How It’s Calculated and How to Claim It

By CA Aman Singhal20 June 20265 min read

If you live in rented accommodation and your salary includes House Rent Allowance, a part of that HRA is tax-free under Section 10(13A). It is one of the most valuable salaried exemptions — but there are rules, and it only applies under the old regime.

Old regime only: HRA exemption is available only if you opt for the old tax regime. Under the new regime, HRA is fully taxable.

How the exemption is calculated

Your exempt HRA is the least of these three amounts:

The actual HRA received from your employer
50% of basic salary if you live in a metro (Delhi, Mumbai, Kolkata, Chennai), else 40%
Rent actually paid minus 10% of basic salary

Worked example: Basic ₹6,00,000, HRA received ₹3,00,000, rent paid ₹2,40,000, in a metro. The three figures are ₹3,00,000 / ₹3,00,000 / ₹1,80,000 → the exemption is the lowest, ₹1,80,000. The remaining ₹1,20,000 of HRA is taxable.

Proof you need to keep

Rent receipts (and a rent agreement is advisable)
Your landlord’s PAN, if your annual rent exceeds ₹1,00,000

Can you claim HRA and a home loan together?

Yes, in genuine cases — for example, if you rent in the city you work in while owning (and repaying a loan on) a home elsewhere. Both benefits can be claimed, but they must be legitimate and documented.

Use our Income Tax Calculator to see how HRA changes your tax under the old regime, or let a CA make sure you claim it correctly.

Try the Income Tax CalculatorFree, CA-verified, runs in your browser.

This article is for general information based on provisions for FY 2025-26 and is not individual tax advice. Rules change and exceptions apply — please confirm with a qualified Chartered Accountant before acting.