Can I claim HRA if I live in a rented house owned by my parents?

Yes, you can pay rent to your parents and claim HRA exemption, provided the arrangement is genuine. Your parents must declare this rental income in their ITR. They can also claim the 30% standard deduction on rental income. This is a legally valid tax-saving strategy.

What if I also have a home loan — can I claim both HRA and home loan interest?

Yes. If your own home is in a different city from where you work (and rent), you can claim both HRA exemption and home loan interest deduction under Section 24(b). If both properties are in the same city, the tax officer may question the claim, but it is not prohibited by law.

My employer does not give HRA. Can I still get any deduction for rent?

If you do not receive HRA but pay rent, you can claim a deduction under Section 80GG. The deduction is the least of: (i) rent paid minus 10% of total income, (ii) 25% of total income, or (iii) ₹5,000 per month (₹60,000/year). This is only available under the Old Tax Regime.

Is HRA fully taxable under the New Tax Regime?

Yes. Under the New Tax Regime, the entire HRA you receive is added to your taxable salary. No exemption is available. This is one of the key trade-offs to consider when choosing between the old and new regimes.

How do I calculate HRA exemption if I live in the same city for part of the year?

HRA exemption is calculated month by month. You can claim exemption only for those months in which you actually paid rent. Provide rent receipts for each month you claim. If your rent or HRA changed during the year, calculate each period separately.

What is the HRA rule for metro vs non-metro cities?

Metro cities for HRA purposes are: Delhi, Mumbai, Kolkata, and Chennai (as per the Income Tax Act). For these cities, the 50% of Basic rule applies. All other cities — Bangalore, Hyderabad, Pune, Ahmedabad, etc. — are treated as Non-Metro, and the 40% of Basic rule applies.

What documents are required to claim HRA exemption?

You need rent receipts for proof of payment. If annual rent exceeds Rs 1,00,000, you must provide the landlord's PAN card copy. A rent agreement is recommended but not mandatory for HRA exemption.

HRA Tax Exemption Calculator 2026-27

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What is HRA (House Rent Allowance)?

House Rent Allowance (HRA) is a component of your salary paid by your employer to cover the cost of rented accommodation. Under Section 10(13A) of the Income Tax Act — HRA exemption rule, a portion of the HRA you receive is exempt from income tax — as long as you are actually paying rent for residential accommodation.

HRA exemption is one of the most valuable tax benefits available to salaried employees in India. For FY 2026-27, the rules remain the same: the exemption is the lowest of three prescribed limits, making it critical to understand which condition is capping your benefit.

How is HRA Exemption Calculated? The 3-Condition Formula

The tax-exempt portion of HRA is the minimum of the following three amounts calculated on a monthly basis:

Actual HRA received from your employer

The HRA component shown on your salary slip each month.

50% of Basic (Metro) or 40% of Basic (Non-Metro)

(Metro cities: Delhi, Mumbai, Kolkata, Chennai) — (Non-metro: 40% of basic salary)

Rent paid − 10% of Basic salary

(Rent receipt threshold: ₹1L for PAN) — If annual rent ≤ ₹1,00,000, no PAN needed.

Example: If your Basic is ₹30,000/mo, HRA received is ₹15,000, you pay ₹18,000 rent, and you live in a metro — then: (1) ₹15,000 (2) ₹15,000 (50% of ₹30,000) (3) ₹18,000 − ₹3,000 = ₹15,000. All three are equal, so the full ₹15,000 is tax-free.

HRA Exemption Under Old vs New Tax Regime

The HRA exemption under Section 10(13A) is available only under the Old Tax Regime. If you opt for the New Tax Regime (introduced in Budget 2020 and made the default from FY 2023-24), you cannot claim HRA exemption.

⚠️ Important: Choose Your Regime Wisely

If your HRA exemption + other deductions (80C, 80D, home loan interest) exceed ₹3.75 lakh per year, the Old Tax Regime is likely better for you. Use our Old vs New Tax Regime Calculator to find your optimal choice.

Documents Required to Claim HRA Exemption

Rent receipts — required if annual rent exceeds ₹1,00,000 (Rent receipt threshold: ₹1L for PAN)
Rent agreement / lease deed — for rent above ₹8,333/month
Landlord PAN — mandatory if annual rent exceeds ₹1,00,000 (Rent receipt threshold: ₹1L for PAN)
Landlord declaration (if they don't have a PAN)

Submit these proofs to your employer before the end of the financial year so TDS is deducted correctly. If not submitted on time, you can still claim the exemption when filing your Income Tax Return (ITR).

What's Next? Complete Your Tax Planning

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Now that you know your HRA tax savings, see your actual take-home pay after all deductions including tax, PF, professional tax, and other components.

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