HRA exemption calculator (old regime): how much of your HRA is tax-free in 2026-27
Your tax-free HRA is the lowest of: (1) actual HRA received, (2) rent paid minus 10% of salary (basic + DA), and (3) 50% of salary if you live in Delhi, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Pune or Ahmedabad, or 40% elsewhere. From Tax Year 2026-27, Pune, Bengaluru, Hyderabad and Ahmedabad moved to the 50% list. HRA exemption is available only in the old regime.
Key facts Last verified: 25 Sep 2026
| Item | Details | Source |
|---|---|---|
| Formula | Least of: actual HRA; rent − 10% of salary; 50% (8 cities) or 40% (others) of salary | Income Tax Dept |
| 50% cities from TY 2026-27 | Delhi, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Pune, Ahmedabad | Income-tax Rules, 2026 |
| “Salary” for HRA | Basic + DA (if part of retirement benefits) + commission as % of turnover | Income Tax Dept |
| Regime | Old regime only | Income Tax Dept |
| Landlord PAN | Needed if annual rent exceeds ₹1 lakh | Income Tax Dept |
| Where the rule sits now | Former section 10(13A) moved to Schedule II of the Income-tax Act, 2025 | Income-tax Act, 2025 |
Worked example (Pune)
Basic + DA ₹40,000 a month, HRA ₹16,000, rent ₹18,000:
- Actual HRA = ₹16,000
- Rent − 10% of salary = 18,000 − 4,000 = ₹14,000
- 50% of salary (Pune is now on the 50% list) = ₹20,000
Exempt HRA = lowest = ₹14,000 a month = ₹1,68,000 a year. Taxable HRA = ₹2,000 a month.
Before 2026-27, Pune was at 40% (₹16,000), so the answer was the same here — but for people with higher rent, the new 50% limit can raise the exemption.
Documents to keep
- Rent receipts or bank transfer proof for every month
- Rent agreement
- Landlord’s PAN if rent is more than ₹1 lakh a year
- Under the new rules, you may need to disclose your relationship with the landlord to your employer (e.g. if you pay rent to a parent). Genuine rent to family is allowed if actually paid and the parent reports it as income.
Frequently asked questions
How is HRA exemption calculated?
It is the lowest of actual HRA received, rent paid minus 10% of salary, and 50% (8 cities) or 40% (other places) of salary.
Is Pune a metro for HRA exemption?
Yes, from Tax Year 2026-27 Pune is one of the 8 cities where the 50% limit applies, along with Bengaluru, Hyderabad and Ahmedabad.
Can I claim HRA in the new tax regime?
No. HRA exemption is available only under the old regime.
Can I claim HRA if I pay rent to my parents?
Yes, if the rent is genuinely paid (preferably by bank transfer) and your parent shows it as rental income. You may have to disclose the relationship to your employer.
Official links
Use only these government websites. HumainOne is not connected to any of them.
- Income Tax DepartmentHRA rules and old-regime deductions
- Income-tax Act, 2025 — overviewWhere HRA rules now sit
Disclaimer: HumainOne is an independent information website. We are not affiliated with UIDAI, the Income Tax Department, EPFO, NPCI, the Election Commission, the Government of Maharashtra or any government body. We do not accept applications, documents or fees. Information is checked against official sources on the date shown but rules change — always confirm on the official website before acting. Calculators give estimates, not official figures, and this is not tax or legal advice.