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Income Tax · Tax Planning·TaxGyani Expert Guide

HRA Exemption: How to Calculate & Claim House Rent Allowance in 2026

Formula, metro vs non-metro rules, documentary proof required, and a worked example — everything to maximise your HRA tax exemption for FY 2025-26.

✍️ CA Sunita Nair
📅 16 March 2026
⏱ 7 min read
🇮🇳 India
In this article
  1. HRA Overview
  2. Calculation Formula
  3. Documents & Conditions
  4. FAQs

HRA Exemption — What Is It?

House Rent Allowance (HRA) is a component of salary provided by employers to help employees meet rental expenses. The exemption under Section 10(13A) allows you to exclude a portion of the HRA received from your taxable income.

Only under Old Tax Regime: HRA exemption is NOT available if you opt for the New Tax Regime (Section 115BAC). If you pay significant rent, this could be a decisive factor in your regime choice.

HRA Exemption Formula — How to Calculate

The exempt amount is the lowest of the following three figures:

1 Actual HRA received from employer
2 Rent paid minus 10% of Basic Salary (Basic + DA)
3 50% of Basic Salary — if you live in Metro cities (Delhi, Mumbai, Chennai, Kolkata)
40% of Basic Salary — if you live in Non-metro cities
Worked Example
Basic Salary: ₹50,000/month | HRA received: ₹20,000/month | Rent paid: ₹18,000/month | City: Delhi (Metro)
① Actual HRA = ₹20,000
② Rent − 10% of Basic = ₹18,000 − ₹5,000 = ₹13,000
③ 50% of Basic = ₹25,000
Exempt HRA = ₹13,000/month = ₹1,56,000/year

Documents & Conditions for HRA Claim

✓ Rent receipts for every month (landlord's name, address, amount, signature)
✓ Rent agreement (if rent exceeds ₹1 lakh per year, landlord's PAN is mandatory)
✗ Cannot claim HRA if you own the house you are living in
✗ Cannot claim if you and your spouse own a house in the same city
Note You can claim both HRA AND home loan deduction (Section 24b) if your rented home and owned property are in different cities

Frequently Asked Questions

Can I pay rent to my parents and claim HRA?
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Yes, provided the rent is actually paid (bank transfer recommended) and your parents own the house. Your parents must declare the rental income in their ITR. The rent should be at a market rate to avoid scrutiny.
What if my employer does not provide HRA?
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If HRA is not part of your salary structure, you can still claim deduction for rent under Section 80GG (up to ₹5,000/month or 25% of income, whichever is lower), subject to conditions.
Is landlord PAN mandatory for HRA claim?
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PAN of the landlord is mandatory if annual rent paid exceeds ₹1,00,000 (i.e., ₹8,333+/month). Without it, you cannot claim HRA exemption for the excess amount.
Can self-employed individuals claim HRA?
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No. HRA exemption under Section 10(13A) is only for salaried individuals. Self-employed individuals may claim rent under Section 80GG instead.