See exactly how much of your house rent allowance is tax-free under Section 10(13A) — the three-limb minimum rule, metro vs non-metro, old regime (FY 2025-26).
How the HRA exemption works
If your salary includes house rent allowance and you live in rented accommodation, Section 10(13A) with Rule 2A exempts the lowest of three amounts from tax:
Exempt HRA = min( ① HRA received, ② rent paid − 10% of basic+DA, ③ 50% of basic+DA in a metro / 40% elsewhere )
Whatever HRA remains above the exempt figure is taxed as normal salary. The rule is computed on the salary for the period the rent was actually paid — if your rent or basic changed mid-year, the calculation runs separately for each period.
Worked example
Basic + DA ₹50,000 a month, HRA received ₹20,000, rent paid ₹18,000, living in Mumbai (metro):
| Limb | Computation | Amount / month |
|---|
| ① HRA received | — | ₹20,000 |
| ② Rent − 10% of basic | 18,000 − 5,000 | ₹13,000 |
| ③ 50% of basic (metro) | 50% × 50,000 | ₹25,000 |
The minimum is limb ② — ₹13,000 a month (₹1,56,000 a year) is exempt, and the remaining ₹7,000 of HRA is taxable. At the 30% slab, that exemption saves about ₹48,700 of tax a year including cess.
The metro list is shorter than you think
For HRA purposes "metro" means exactly four cities: Delhi, Mumbai, Kolkata and Chennai. Bengaluru, Hyderabad, Pune, Ahmedabad, Gurgaon and Noida all count as non-metro and get the 40% limit — a quirk that dates from when the rule was framed and has never been updated. If you live in Gurgaon but your office address is Delhi, what matters is where you reside and pay rent.
Old regime only — check before you choose
HRA exemption does not exist in the new tax regime. For FY 2025-26 the new regime charges zero tax up to ₹12 lakh of taxable income, so for small rents the new regime usually still wins. But a high-rent metro tenant with full 80C and home-loan interest can flip the answer — run both regimes in our income tax calculator with your real numbers before submitting your investment declaration.
Paperwork that keeps the claim safe
- Rent receipts (or rent agreement) for your employer's TDS records.
- Landlord's PAN reported to your employer when annual rent crosses ₹1,00,000.
- Bank trail — pay rent by transfer, not cash; it is the evidence that survives scrutiny.
- Paying parents? They must declare the rent as income in their return.
Frequently Asked Questions
Can I claim HRA exemption in the new tax regime?
No. HRA exemption under Section 10(13A) is available
only in the old tax regime. If you pay high rent in a metro, the HRA exemption is often the single biggest reason the old regime can beat the new one — compare both in our
income tax calculator before choosing.
Which cities count as metro for HRA?
Only four: Delhi, Mumbai, Kolkata and Chennai — these get the 50%-of-basic limit. Bengaluru, Hyderabad, Pune, Gurgaon and Noida are all "non-metro" for this rule and get 40%, regardless of how metropolitan they feel.
Can I pay rent to my parents and claim HRA?
Yes, if the arrangement is genuine: you actually transfer rent (bank trail strongly advised), the house belongs to the parent, and the parent declares the rent as income in their return. You cannot pay rent to your spouse, and you cannot claim HRA for a house you own yourself.
Do I need rent receipts or my landlord’s PAN?
Your employer will ask for rent receipts to allow the exemption in TDS. If annual rent exceeds ₹1,00,000, you must also report the landlord’s PAN to your employer. Keep a bank-transfer trail — cash rent with no evidence is the most common reason HRA claims fail in scrutiny.
Can I claim HRA and home-loan tax benefits together?
Yes, when both are genuine — for example, you own a house in one city (claiming home-loan interest) but live on rent in another city for work. Claiming rent on a house you also occupy as owner is not allowed.
What if my salary has no HRA component?
You cannot use Section 10(13A), but Section 80GG offers a smaller deduction — least of ₹5,000 a month, 25% of total income, or rent minus 10% of income — provided you (and your spouse/minor child) own no home in your work city. It is old-regime-only as well.
Estimates are for information and education only — not financial, tax or investment advice. Verify current rates and rules with official sources.