How is HRA exemption calculated?

HRA exemption under Section 10(13A) is the least of three amounts: (1) actual HRA received, (2) rent paid minus 10% of salary, and (3) 50% of salary if you live in a metro (Delhi, Mumbai, Kolkata, Chennai) or 40% if non-metro. 'Salary' means Basic + Dearness Allowance (forming part) + commission as a fixed % of turnover.

Is HRA exemption available in the new tax regime?

No. HRA exemption under Section 10(13A) is available only under the old tax regime. Under the new regime (default from FY 2023-24) HRA is fully taxable.

Can I claim HRA if I pay rent to my parents?

Yes, if it is a genuine arrangement — you actually pay rent, your parents own the property and declare the rent as income. Keep rent receipts and a rent agreement; pay by bank transfer.

Blog › Income Tax

HRA Exemption Calculation (Section 10(13A))

Updated 25 June 2026 · 5 min read · By KyaTax

If you receive House Rent Allowance and pay rent, part of your HRA is exempt from tax under Section 10(13A). But the exempt amount is not simply the HRA you get — it's the least of three figures. Here's exactly how to compute it.

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The least-of-three rule

HRA exemption = the lowest of these three:

Actual HRA received from your employer
Rent paid − 10% of salary
50% of salary if you live in a metro (Delhi, Mumbai, Kolkata, Chennai), or 40% of salary if non-metro

💡 "Salary" here = Basic pay + Dearness Allowance (if it forms part of retirement benefits) + commission as a fixed % of turnover. It does not include other allowances.

Example

Basic + DA = ₹6,00,000/yr · HRA received = ₹2,40,000 · Rent paid = ₹3,00,000 · City = Delhi (metro):

Particulars	Amount
1. Actual HRA received	₹2,40,000
2. Rent − 10% of salary (3,00,000 − 60,000)	₹2,40,000
3. 50% of salary (metro)	₹3,00,000
Exempt HRA = least of the three	₹2,40,000

So the entire ₹2,40,000 HRA is exempt here; any HRA above the least-of-three would be taxable.

Key points

Old regime only: HRA exemption is available only if you opt for the old tax regime. Under the new regime, HRA is fully taxable.
Compute period-wise: if your salary, HRA, rent or city changed during the year, calculate month-by-month and add up.
Rent above ₹1 lakh/year: you must report the landlord's PAN to your employer.
No HRA component? Self-employed or salaried without HRA can claim rent under Section 80GG (different limits).

Old vs New regime — which saves more?

HRA, 80C and deductions only help under the old regime. Compare both in seconds.

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FAQ

Can I claim both HRA and a home loan deduction?

Yes, in genuine cases — e.g., you own a house in one city (claiming home-loan interest) but live on rent in another for work. Be ready to justify it.

Do I need rent receipts?

Yes — keep rent receipts (and a rent agreement for larger amounts); pay rent by bank transfer for a clean trail.