If you live in a rented home and your salary includes a house rent allowance (HRA), part or all of it can be tax-free under the old tax regime. The exempt amount is the lowest of three figures, and this calculator works out all three for you.
The three limits
- The HRA you actually received.
- Rent paid minus 10% of your salary (basic pay plus DA).
- 50% of salary if you live in one of the listed metro cities, otherwise 40%.
What changed for FY 2026-27
Under the Income-tax Rules, 2026, Bengaluru, Hyderabad, Pune and Ahmedabad join Delhi, Mumbai, Kolkata and Chennai in the 50% list. For FY 2025-26 returns, those four cities still use 40%. Some sources still describe the change as a draft, so check the notified rules before you file.
Example
A Bengaluru employee with ₹6 lakh basic salary, ₹2.4 lakh HRA and ₹3 lakh annual rent: rent minus 10% of salary is ₹2.4 lakh, 50% of salary is ₹3 lakh, and HRA received is ₹2.4 lakh. The lowest is ₹2.4 lakh, so the entire HRA is tax-free in FY 2026-27.
Tips
- Keep rent receipts and a rent agreement. Give your landlord’s PAN to your employer if annual rent is above ₹1 lakh.
- Rent paid to parents can qualify if they own the house and declare the rent as income. Rent paid to a spouse is generally not accepted.
- HRA exemption is not available in the new regime. Enter the exempt amount in our income tax calculator to compare regimes.
