What it does
If your employer pays you a house rent allowance (HRA) and you live in a rented home, part of that HRA can be tax-free in India’s old tax regime. The tax-free part is the smallest of three amounts: the HRA you receive, the rent you pay minus 10% of your salary, and 50% of your salary in the listed cities or 40% elsewhere. This calculator works out all three, marks the lowest and shows the tax-free and taxable HRA a month and for the year.
From FY 2026-27, Bengaluru, Hyderabad, Pune and Ahmedabad get the 50% limit too, alongside Mumbai, Delhi, Kolkata and Chennai. To see whether the old regime, with HRA, beats the new one for you, use the India income tax calculator.
How to use it
- Enter your monthly Basic + DA, the HRA on your payslip and the rent you pay.
- Choose the city where you rent and the tax year.
- If you rented for only part of the year, enter the number of months.
- Read the tax-free and taxable HRA, and the three limits below them.
What each setting does
- Basic + DA: “salary” for HRA means Basic plus DA that counts for retirement benefits, plus any commission paid as a fixed % of sales. Not your gross pay.
- HRA received: the allowance on your payslip.
- Rent you pay: the rent for the home you live in.
- City: the eight listed cities get 50% of salary, everywhere else 40%.
- Tax year: before FY 2026-27, only the four older metros got 50%.
- Months: for months without rent, all HRA is taxable.
Worked example
Basic + DA ₹50,000 a month, HRA ₹20,000, rent ₹25,000, in Delhi. The three limits are ₹20,000 (HRA), ₹25,000 − ₹5,000 = ₹20,000 (rent minus 10%), and ₹25,000 (50% of salary). The lowest is ₹20,000, so all the HRA is tax-free: ₹2,40,000 for the year.
FAQs
Can I claim HRA in the new regime? No. HRA is fully taxable there.
I pay rent to my parents. Is that allowed? Generally yes, if the rent is real, paid and they show it as income. Your employer may ask for your landlord’s PAN when the rent is over ₹1 lakh a year.
Is this my final tax? No. Not financial or tax advice; check the official source.
Where the numbers come from
- Least of three rule (actual HRA, rent paid minus 10% of salary, 50% of salary in metro cities or 40% elsewhere; salary = Basic + DA forming part of retirement benefits + commission as a % of turnover): Income-tax Act, 1961 section 10(13A) with Rule 2A, carried into the Income-tax Act, 2025 and Income-tax Rules, 2026. Estimate, check the official source: https://www.incometax.gov.in
- From FY 2026-27 the 50% limit covers Mumbai, Delhi, Kolkata, Chennai, Bengaluru, Hyderabad, Pune and Ahmedabad; HRA exemption is not available in the new regime: Income-tax Rules, 2026, as reported by Moneylife, 20 March 2026, https://www.moneylife.in/article/new-income-tax-rules-from-1st-april-hra-exemption-extended-to-8-cities-fewer-forms-but-landlord-disclosure-now-mandatory/79998.html and Mondaq, 26 March 2026, https://www.mondaq.com/india/corporate-tax/1764640/income-tax-rules-2026-notified-hra-allowance-and-form-changes-that-salary-earners-and-corporates-must-prepare-for (checked 2026-11-10). Check the official source: https://www.incometax.gov.in
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Last updated 2026-11-10.