What is HRA exemption?
House rent allowance is the part of salary meant for rent. If you pay rent and choose the old regime, part or all of it is tax-free. The tax-free amount depends on your basic pay, the rent you pay and the city you live in.
How to use this calculator
- Enter your monthly basic pay plus DA and the HRA on your payslip.
- Enter the rent you pay each month.
- Switch on the city option if you live in one of the eight named cities.
- Set how many months you paid rent this year.
Tax-free HRA at different rents
Basic ₹50,000 a month and HRA ₹25,000 a month, for a full year.
| Monthly rent | Eight named cities | Other places |
|---|---|---|
| ₹15,000 | ₹1,20,000 | ₹1,20,000 |
| ₹20,000 | ₹1,80,000 | ₹1,80,000 |
| ₹25,000 | ₹2,40,000 | ₹2,40,000 |
| ₹30,000 | ₹3,00,000 | ₹2,40,000 |
| ₹40,000 | ₹3,00,000 | ₹2,40,000 |
How HRA exemption is calculated
The exempt amount is the least of three figures for the period you paid rent:
1. HRA actually received
2. Rent paid − 10% of salary
3. 50% of salary (eight named cities) or 40% (elsewhere)
Salary here means basic pay plus DA. Whatever is left of your HRA is taxed as salary.
Worked example
Basic ₹50,000 a month (₹6 lakh a year), HRA ₹20,000 a month (₹2.4 lakh), rent ₹25,000 a month (₹3 lakh), living in Bengaluru.
| HRA received | ₹2,40,000 |
| Rent − 10% of salary: ₹3,00,000 − ₹60,000 | ₹2,40,000 |
| 50% of salary | ₹3,00,000 |
| Exempt (least of the three) | ₹2,40,000 |
|---|---|
| Taxable HRA | ₹0 |
What changed for tax year 2026-27
The Income-tax Rules, 2026 (rule 279) list eight cities for the 50% limit. If you rent in Bengaluru, Hyderabad, Pune or Ahmedabad, check whether your employer has applied the higher limit. The rule names cities, not their wider regions; we treat places such as Gurugram, Noida, Thane and Navi Mumbai as “any other place” unless official guidance says otherwise.