KitnaBanega

HRA Exemption 2026: Rules, 8 Metro Cities and Calculation

Updated 5 November 2026

House Rent Allowance (HRA) is part of many salaries. If you live in a rented home, part of it is tax-free, but only in the old tax regime.

How the tax-free part is worked out

The tax-free HRA is the lowest of these three:

  1. The HRA you actually received.
  2. Rent paid minus 10% of basic + DA.
  3. 50% of basic + DA in the eight listed cities, 40% elsewhere.

The eight cities (from FY 2026-27)

Delhi, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Pune, Ahmedabad. Bengaluru, Hyderabad, Pune and Ahmedabad were added by the Income-tax Rules, 2026.

Example

Basic + DA ₹50,000 a month, HRA ₹20,000, rent ₹25,000, living in Pune. Yearly: HRA ₹2.4 lakh; rent minus 10% of basic = ₹2.4 lakh; 50% of basic = ₹3 lakh. Tax-free HRA = ₹2.4 lakh.

What you need

  • Rent receipts or a rent agreement.
  • Your landlord's PAN if the rent is above ₹1 lakh a year.
  • You cannot claim HRA for rent paid to your spouse; rent paid to parents is allowed if they own the house and show the rent as income.

Try it

Open the HRA calculator and enter your own numbers. Words you don't know are explained in the money glossary.

More from the blog