See exactly how much of your House Rent Allowance is tax-free — the least-of-three rule, metro vs non-metro, with the numbers shown.
Under the HRA exemption provision (Section 10(13A) of the 1961 Act, renumbered under the Income-tax Act 2025), the exempt HRA is the least of these three:
| # | Amount |
|---|---|
| 1 | Actual HRA received |
| 2 | Rent paid − 10% of (basic + DA) |
| 3 | 50% of salary (metro) or 40% (non-metro) |
Priya (Mumbai) earns ₹40,000 basic + DA, gets ₹20,000 HRA and pays ₹18,000 rent, monthly.
Yearly: actual HRA ₹2,40,000; rent − 10% salary = ₹2,16,000 − ₹48,000 = ₹1,68,000; 50% of salary = ₹2,40,000. The lowest is ₹1,68,000, so that much is tax-free and ₹72,000 is taxable.
HRA exemption exists only in the old regime. If you choose the new regime you give it up in exchange for lower slab rates — so it's worth comparing both with our income tax calculator.
Exempt HRA is the least of three amounts: (1) actual HRA received, (2) rent paid minus 10% of salary, and (3) 50% of salary for metro cities or 40% for non-metro. Salary here means basic pay plus dearness allowance.
Only Delhi, Mumbai, Kolkata and Chennai count as metro, giving the 50% limit. Every other city, including Bengaluru, Hyderabad and Pune, uses 40%.
Yes, in some cases — for example, if you live in a rented home in one city and own a house (with a loan) in another, or your own house is genuinely not usable. Both benefits are old-regime only.
Yes, if you genuinely pay rent to a parent who owns the home and reports it as income. Keep rent receipts, a rent agreement and bank transfers as proof.
No. HRA exemption is an old-regime benefit only. Under the new regime you cannot claim it — compare both with our income tax calculator to see which is better.
Rent receipts, and for annual rent above ₹1,00,000 your landlord's PAN. A rent agreement and bank transfer records make the claim stronger.
No. Only the exempt portion (the least-of-three amount) is tax-free; any HRA above that is added to your taxable salary.
If you don't pay rent, no HRA exemption is available — the whole HRA becomes taxable.