HRA Exemption Explained
The three-part HRA exemption rule, a worked example, rent receipt and PAN requirements, and which tax regime allows it.
House Rent Allowance (HRA) is part of many salaries. If you pay rent, part of it can be exempt from tax, but only in the old tax regime. The new regime does not allow the HRA exemption. See the old vs new regime guide to decide which suits you.
The exemption is the lowest of three amounts
- The actual HRA received.
- Rent paid minus 10% of salary (basic plus dearness allowance).
- 50% of salary if you live in a metro (Delhi, Mumbai, Kolkata, Chennai), otherwise 40%. Some other cities have been brought into the 50% group in recent rules, so check the current list.
Worked example
Basic salary ₹50,000 a month, HRA received ₹20,000, rent paid ₹18,000, living in a metro.
- Actual HRA: ₹20,000
- Rent minus 10% of salary: ₹18,000 − ₹5,000 = ₹13,000
- 50% of salary: ₹25,000
The lowest is ₹13,000, so ₹13,000 a month (₹1,56,000 a year) is exempt. Verify your own figure with the HRA calculator.
Documents and rules
- Keep rent receipts or the rent agreement.
- If yearly rent exceeds ₹1 lakh, give your landlord's PAN to your employer.
- Rent paid to a parent is allowed if it is genuine, with proper payment records and the parent declaring the income.
General information. Confirm current rules and city lists with the Income Tax Department or a tax professional.
Frequently asked questions
Can I claim HRA and home loan interest together?
Yes, if you live in a rented house in one place and own a property elsewhere, subject to conditions.
Is HRA available in the new regime?
No. It is an old-regime benefit.
More guides
Calculators
Last reviewed: October 2026. General education, not financial advice.