Tax-free HRA is the lowest of three amounts, worked out on yearly figures.
Only the old regime allows it. The 50% cities are Delhi, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Pune and Ahmedabad (Income-tax Rules, 2026).
50 thousand
20 thousand
25 thousand
City
Tax-free HRA a year
₹2,40,000
Set by the HRA you receive.
Only in the old tax regime. The new regime gives no HRA exemption.
Next: Income tax IndiaCompare both tax regimes.
House rent allowance is part of your salary for rent. Under the old regime, some of it is tax-free: the least of the HRA you receive, rent paid minus 10% of salary, and 50% or 40% of salary depending on where you live. Salary here means basic pay plus dearness allowance if it counts for retirement benefits. No other allowances are included. The new regime gives no HRA exemption.
The list of cities changed on 1 April 2026. Rule 279 of the Income-tax Rules, 2026 gives the 50% limit to eight cities: Mumbai, Kolkata, Delhi, Chennai, Hyderabad, Pune, Ahmedabad and Bengaluru. Every other place, including Noida, Gurugram and Navi Mumbai, uses 40%. If you live in Bengaluru, Hyderabad, Pune or Ahmedabad, your exemption can go up from this year if the 50% rule was the one limiting you.
You claim it through your employer with Form 124, which replaced Form 12BB. Rent above ₹1 lakh a year needs the landlord's name, address and PAN, and your relationship to them, if any. Paying rent to a parent is allowed if the payment is real and they declare it as income. Whether the old regime is worth it overall depends on all your deductions, so compare both in the income tax calculator. The salary calculator shows in-hand pay, and the loan eligibility calculator helps if you are weighing rent against a home loan. The same basic-pay figure also sets your gratuity.
exempt HRA =min(HRA received, rent − 10% of basic, 50% or 40% of basic)Read the full methodologyFound an error? Contact us
Each example is worked out by the same code as the calculator above.
Basic ₹50,000, HRA ₹25,000 and rent ₹25,000 a month: ₹6 lakh, ₹3 lakh and ₹3 lakh a year. Rent minus 10% of basic = ₹2.4 lakh. 50% of basic = ₹3 lakh. HRA received = ₹3 lakh. The least, ₹2.4 lakh, is exempt. The other ₹60,000 of HRA is taxed.
Basic ₹40,000, HRA ₹20,000 and rent ₹22,000 a month: ₹4.8 lakh, ₹2.4 lakh and ₹2.64 lakh a year. Rent minus 10% of basic = ₹2.16 lakh. 40% of basic = ₹1.92 lakh. The exemption is ₹1.92 lakh.
The frame shows the tool only.
<iframe src="/embed/hra" title="HRA exemption" width="100%" height="720" style="border:0;max-width:42rem" loading="lazy"></iframe>It is the lowest of: HRA you receive, rent paid minus 10% of basic, and 50% of basic in a metro (40% elsewhere).
No. HRA exemption is only available in the old regime.
From 1 April 2026, eight cities get the 50% limit: Mumbai, Kolkata, Delhi, Chennai, Hyderabad, Pune, Ahmedabad and Bengaluru. Everywhere else uses 40%.
Yes, if you actually pay them and they show the rent as income. Keep bank transfers and a rent agreement.
Yes. From 1 April 2026, Bengaluru, Hyderabad, Pune and Ahmedabad get the 50% limit along with Mumbai, Delhi, Kolkata and Chennai.
Form 124 under the Income-tax Rules, 2026, which replaced Form 12BB, with rent receipts and the landlord's PAN if rent is above ₹1 lakh a year.
Yes, in the old regime, if you rent where you work and the house you own is somewhere else or not yet ready.