# HRA Calculator

> Tax-free HRA is the lowest of the HRA you receive, rent minus 10% of basic + DA, and 50% of basic + DA in eight major metros (40% elsewhere). On ₹50,000 basic, ₹20,000 HRA and ₹18,000 rent a month in Bengaluru, ₹13,000 a month (₹1,56,000 a year) is exempt in FY 2026-27 under the old regime.

- Interactive calculator: https://calculatorswithsteps.com/hra-calculator
- Category: India Finance Calculators
- Last updated: 2026-11-10
- Publisher: Calculators With Steps (calculatorswithsteps.com)

## How to use the HRA calculator

1. **Monthly or yearly** – enter all three amounts the same way. Payslips show monthly figures, Form 16 shows yearly ones.
2. **Financial year** – FY 2026-27 uses the new list of eight 50% cities. Pick FY 2025-26 if you are checking last year's return.
3. **Basic salary + DA** – your basic pay plus dearness allowance if it counts for retirement benefits. Do not include HRA, special allowance or bonus.
4. **HRA received** – the house rent allowance on your payslip.
5. **Rent paid** – what you actually pay your landlord.
6. **City** – the city where the rented house is, not where your office is.

The calculator shows the exempt and taxable HRA, the three limits side by side, the rent at which your exemption stops rising, and whether you need your landlord's PAN.

## HRA exemption formula

The exempt amount is the **least of these three**, worked out for the months you lived in the rented house:

1. **Actual HRA received**
2. **Rent paid − 10% of (basic + DA)**
3. **50% of (basic + DA)** for Mumbai, Delhi, Kolkata, Chennai, Bengaluru, Hyderabad, Pune and Ahmedabad, or **40% of (basic + DA)** for any other place

**Taxable HRA = HRA received − exempt HRA.** The taxable part is added to your salary income. Under the Income-tax Act, 2025 the exemption sits in Schedule III, with the limits in Rule 279 of the Income-tax Rules, 2026.

## Worked example

Monthly basic + DA ₹50,000, HRA ₹20,000 and rent ₹18,000 in Bengaluru, FY 2026-27. Yearly that is ₹6,00,000 salary, ₹2,40,000 HRA and ₹2,16,000 rent.

| Rule | Yearly amount |
| --- | --- |
| 1. HRA received | ₹2,40,000 |
| 2. Rent − 10% of salary (₹2,16,000 − ₹60,000) | ₹1,56,000 |
| 3. 50% of salary (Bengaluru) | ₹3,00,000 |
| **Exempt HRA (lowest)** | **₹1,56,000** |
| Taxable HRA (₹2,40,000 − ₹1,56,000) | ₹84,000 |

Here the rent is the limit. Rent of ₹25,000 a month would make the full ₹2,40,000 exempt, and paying more than that adds nothing more.

## What changed for FY 2026-27

The new Income-tax Rules, 2026 added Bengaluru, Hyderabad, Pune and Ahmedabad to the 50% list. This helps when rule 3 is the lowest limit, which happens when rent is high compared with salary. With ₹50,000 basic, ₹25,000 HRA and ₹30,000 rent a month in Bengaluru:

| Year | Rule 3 limit | Exempt HRA |
| --- | --- | --- |
| FY 2025-26 (40%) | ₹2,40,000 | ₹2,40,000 |
| FY 2026-27 (50%) | ₹3,00,000 | ₹3,00,000 |

The extra ₹60,000 exemption saves up to about ₹18,720 of tax in the 30% slab, including cess. For someone in Mumbai with ₹60,000 basic, ₹30,000 HRA and ₹35,000 rent a month, the exemption is ₹3,48,000 and only ₹12,000 is taxable.

The 2026 rules also ask for more detail on your rent claim: the landlord's PAN when yearly rent exceeds ₹1 lakh, and your relationship with the landlord, if any. The declaration goes to your employer on Form 124, which replaces Form 12BB.

## Rules and common mistakes

- **Old regime only.** If you choose the new regime, HRA is fully taxable. Run both through the [income tax calculator](https://calculatorswithsteps.com/income-tax-calculator-india) before you decide.
- **Keep rent receipts and the rental agreement.** Pay by bank transfer where possible.
- **Living in your own house?** No HRA exemption is allowed if you live in a house you own in the same city.
- **Home loan and HRA together** are allowed when the house you own is in a different city or is not ready.
- **Salary means basic + DA only.** Using gross salary overstates rules 2 and 3.
- **Don't have HRA in your salary?** Self-employed people and employees without HRA may claim a smaller deduction for rent under Section 80GG of the old regime.

The calculator assumes you rented the same house for the whole year. If your rent or salary changed mid-year, calculate each period separately and add the results.

## Frequently asked questions

### How is HRA exemption calculated?

The tax-free part of HRA is the lowest of: (1) the HRA you actually receive, (2) rent paid minus 10% of basic salary plus DA, and (3) 50% of basic plus DA if you live in one of the eight listed cities, or 40% elsewhere. The rest of your HRA is taxable.

### Which cities count as metro for HRA from FY 2026-27?

From 1 April 2026, Rule 279 of the Income-tax Rules, 2026 allows 50% of salary for Mumbai, Delhi, Kolkata, Chennai, Bengaluru, Hyderabad, Pune and Ahmedabad. Every other place gets 40%. Up to FY 2025-26, only Mumbai, Delhi, Kolkata and Chennai qualified for 50%.

### Can I claim HRA in the new tax regime?

No. HRA exemption is available only if you choose the old tax regime. Under the new regime the full HRA is taxable, but the lower slab rates often make up for it. Compare both with the income tax calculator.

### Is the landlord's PAN required for HRA?

Yes, if the rent you pay in the year is more than ₹1 lakh, which is about ₹8,333 a month. Give your employer the landlord's name, address and PAN, and from FY 2026-27 also say whether the landlord is a relative.

### How much HRA exemption do I get on a ₹50,000 basic salary?

It depends on your HRA and rent. With ₹50,000 basic, ₹20,000 HRA and ₹18,000 rent a month, the exemption is ₹1,56,000 a year (₹13,000 a month), limited by rent minus 10% of salary. ₹84,000 of the ₹2,40,000 HRA is taxable.

### Can I pay rent to my parents and claim HRA?

Yes, if you actually pay the rent, ideally by bank transfer, your parent owns the house and you do not co-own it. Your parent must show the rent as income in their own return. Paying rent to your spouse is usually not accepted.

### What is the HRA formula in Excel?

With yearly HRA in B1, rent in B2 and basic plus DA in B3, use =MIN(B1, MAX(0, B2-10%*B3), 50%*B3) for the eight listed cities, or replace 50% with 40% for other places.

## Sources

- [Income-tax Rules, 2026 (Gazette notification, 20 March 2026) – Rule 279 and Rule 205](https://www.incometax.gov.in/iec/foportal/sites/default/files/2026-03/En-Notified-IT-Rules-2026-20-03-2026.pdf)
- [Income Tax Department e-filing portal – Salaried individuals](https://www.incometax.gov.in/iec/foportal/help/individual/return-applicable-1)

> Disclaimer: results are estimates for information and education, not tax advice. Confirm important decisions with a qualified professional.