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For individualsRates reviewed September 2026

HRA Exemption Calculator under Section 10(13A)

An HRA exemption calculator applies the three-way least-of test that decides how much of your house rent allowance escapes tax. The exemption sits in Section 11 of the Income-tax Act, 2025 (the successor to Section 10(13A) of the Income-tax Act, 1961), and the computation mechanics carried over from Rule 2A into the Income-tax Rules, 2026 notified on 20 March 2026.

The single biggest change for FY 2026-27 is the city list. Until FY 2025-26 only Delhi, Mumbai, Kolkata and Chennai attracted the 50% limb. From 1 April 2026 Ahmedabad, Bengaluru, Hyderabad and Pune join them, so eight cities now compute the third limb at 50% of salary rather than 40%.

One caveat overrides all of this: HRA exemption is not available under the new tax regime, which is the default regime. If you have not consciously opted into the old regime, your HRA is fully taxable and this calculator tells you what you are giving up rather than what you will save.

HRA Exemption Calculator

Results are always shown for the year. Monthly entries are multiplied by 12.

₹

Only the DA that forms part of retirement benefits counts.

₹

Only commission computed as a fixed percentage of turnover.

₹
₹
₹

Ahmedabad, Bengaluru, Hyderabad and Pune moved to the 50% limb from FY 2026-27.

HRA exempt

₹4,00,000

Least of the three limbs, on the old regime. Limb 2, rent paid minus 10% of salary is the binding one.

Salary for this purposeBasic plus qualifying DA plus turnover commission only
₹8,00,000
Limb 1, actual HRA received
₹4,00,000
Limb 2, rent paid minus 10% of salary₹4,80,000 rent less ₹80,000
₹4,00,000
Limb 3, 50% of salaryA 50% city from FY 2026-27
₹4,00,000
Least of the three limbs
Limb 2, rent paid minus 10% of salary
HRA exempt
₹4,00,000
Taxable HRA
₹0
Share of HRA that escapes tax
100%
  • HRA exemption is not available under the new tax regime, which is the default regime. Unless you have opted into the old regime for the year the exemption is nil and the whole allowance is taxable.
  • Annual rent exceeds ₹1,00,000, so the landlord's PAN must be reported in Form 124, the employee claims statement that replaced Form 12BB from 1 April 2026.
  • Each limb is computed for the period of occupation. A mid-year move or salary revision has to be worked out separately for each stretch and the exemptions added together.

The formula

HRA exemption = Least of (actual HRA received, rent paid - 10% of salary, 50% of salary for a 50% city or 40% of salary elsewhere)

Salary
Basic salary, plus dearness allowance only where it forms part of retirement benefits, plus commission computed as a fixed percentage of turnover. No other allowance enters this figure.
Actual HRA received
The house rent allowance actually paid by the employer for the period during which the rented accommodation was occupied.
Rent paid
Rent actually paid for the year for accommodation you occupy but do not own.
50% city
Delhi, Mumbai, Kolkata, Chennai, and from FY 2026-27 also Ahmedabad, Bengaluru, Hyderabad and Pune.

Each limb is computed for the period of occupation, so a mid-year move or a mid-year salary revision must be worked out separately for each stretch.

How to calculate it

  1. 1

    Confirm you are on the old regime

    HRA exemption is unavailable under the default new regime. Unless you have opted for the old regime for the year, the exemption is nil regardless of the rent you pay.

  2. 2

    Build the salary figure

    Add basic salary, dearness allowance forming part of retirement benefits, and commission at a fixed percentage of turnover. Leave out every other allowance, perquisite and bonus.

  3. 3

    Compute the three limbs

    Take the actual HRA received, then rent paid minus 10% of salary, then 50% or 40% of salary depending on the city. Compute all three for the same period.

  4. 4

    Take the lowest

    The exemption is the smallest of the three figures. The balance of the HRA received is taxable salary.

  5. 5

    Collect the landlord documentation

    Where annual rent exceeds ₹1,00,000 you must report the landlord's PAN to the employer, or a declaration if the landlord has no PAN. From 1 April 2026 the employee claims statement is Form 124, which replaced Form 12BB, and it also asks you to disclose your relationship with the landlord.

City classification for the third limb, FY 2026-27

City classification for the third limb, FY 2026-27
CityLimb from FY 2026-27Limb until FY 2025-26
Delhi, Mumbai, Kolkata, Chennai50% of salary50% of salary
Ahmedabad, Bengaluru, Hyderabad, Pune50% of salary40% of salary
Every other city or town40% of salary40% of salary

Worked example

Basic salary for the year
₹8,00,000
Dearness allowance
Nil
HRA received
₹4,00,000
Rent paid
₹4,80,000
City of residence
Bengaluru
Regime
Old regime
  • Salary for this purpose = ₹8,00,000 basic + nil DA + nil turnover commission = ₹8,00,000
  • Limb 1, actual HRA received = ₹4,00,000
  • Limb 2, rent paid minus 10% of salary = ₹4,80,000 - ₹80,000 = ₹4,00,000
  • Limb 3, Bengaluru is a 50% city from FY 2026-27, so 50% of ₹8,00,000 = ₹4,00,000
  • At the earlier 40% rate the third limb would have been ₹3,20,000 and would have capped the exemption

Exempt HRA = ₹4,00,000 and taxable HRA = nil. The reclassification of Bengaluru lifts the exemption by ₹80,000 compared with FY 2025-26.

Frequently asked questions

No. HRA exemption is one of the allowances withdrawn under the new regime, which is the default regime. To claim it you must opt for the old regime for that year, and you should compare the tax saved against the lower slab rates and the ₹75,000 standard deduction that the new regime offers.
Eight cities: Delhi, Mumbai, Kolkata and Chennai, plus Ahmedabad, Bengaluru, Hyderabad and Pune, which were added by the Income-tax Rules, 2026 with effect from 1 April 2026. Every other location applies the 40% limb. The change applies from FY 2026-27 onward and does not alter returns for earlier years.
Only basic salary, dearness allowance to the extent it forms part of retirement benefits, and commission calculated as a fixed percentage of turnover. Conveyance allowance, special allowance, bonus, overtime and perquisites are excluded, which is why the salary figure used here is usually much smaller than your CTC.
Yes, if the rent you pay exceeds ₹1,00,000 in the year. You report the PAN to your employer in Form 124, the employee claims statement that replaced Form 12BB from 1 April 2026. If the landlord genuinely has no PAN, a signed declaration from the landlord is accepted instead.
Yes, provided the arrangement is genuine: your parents must own the property, you must actually pay the rent, and they must offer that rent as income in their own returns. Form 124 requires you to disclose your relationship with the landlord, so a paper arrangement with no money moving is easy for the department to identify.
Yes, they are separate provisions and can overlap, for example where you own a house in one city and rent accommodation in another because of your job. Both benefits, however, sit on the old regime, so you have to be on the old regime to use either of them.
Compute the exemption separately for each period rather than for the year as a whole. Each period uses its own salary, its own rent and its own city classification, and the exemptions for the periods are then added together. Working it out on annual averages generally overstates or understates the exemption.

Sources

Rates and rules on this page come from the following. This is a working aid, not professional advice: confirm anything material with your Chartered Accountant before you act on it.

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