HRA Exemption Explained: Rules, Formula and Example

2 min read · Updated 11 November 2026 · QuickKit Team

House Rent Allowance (HRA) is part of many salaries. If you live in a rented home, part or all of it can be tax-free — but only under the old tax regime.

The HRA formula

The exempt amount is the lowest of:

  1. Actual HRA received from your employer
  2. Rent paid minus 10% of basic salary (plus DA)
  3. 50% of basic salary in Delhi, Mumbai, Kolkata or Chennai; 40% elsewhere

Worked example

Basic ₹50,000/month, HRA ₹20,000/month, rent ₹18,000/month, living in Mumbai:

RuleYearly amount
Actual HRA received₹2,40,000
Rent − 10% of basic₹1,56,000
50% of basic (metro)₹3,00,000
Exempt HRA (lowest)₹1,56,000
Taxable HRA₹84,000

Documents you need

  • Monthly rent receipts signed by your landlord.
  • Your landlord's PAN if annual rent exceeds ₹1 lakh.
  • A rent agreement is good to have and some employers ask for it.

Common questions

  • Can I pay rent to my parents? Yes, if they own the house and declare the rent as income. You can't claim HRA on rent paid to your spouse.
  • What if I don't get HRA? Self-employed people and employees without HRA may be able to claim section 80GG instead (old regime).
  • Is HRA allowed in the new regime? No. Check whether the old regime saves you more with the income tax calculator.

Work out your own exemption with the HRA calculator.

More guides

Frequently asked questions

Is HRA exemption available in the new tax regime?

No. HRA exemption under section 10(13A) can only be claimed under the old tax regime.

Is landlord PAN mandatory for HRA?

Yes, if the total rent you pay in the financial year is more than ₹1 lakh.

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