House rent allowance is exempt up to the least of three amounts. Which of the three binds is the part that matters, because it decides whether anything you do will change the answer.
Rules checked 20 August 2026
The exemption is the least of three amounts, and in your case the one that binds is rent paid above 10% of basic salary. The remaining ₹1,20,000 of your HRA is taxable, and at a 30% slab the exemption is worth ₹54,000 to you.
| Limb | Amount |
|---|---|
| HRA actually received | ₹3,00,000 |
| 50% of basic salary (metro) | ₹3,00,000 |
| Rent paid above 10% of basic salarythis one binds | ₹1,80,000 |
Because the rent limb binds, paying ₹1,000 a month more rent would raise your exemption by ₹12,000 a year and save you ₹3,600 in tax. That is a reason to claim the rent you actually pay, not a reason to pay more.
Basic and dearness allowance only, not your full package
The HRA exemption is available under the old regime only. Under the new regime it is not available at all, whatever your rent, which is the first thing to settle before using this page. Total exemption available: ₹1.80 L.
The exemption is the smallest of three figures:
One. The HRA you actually receive. Two. 50% of basic salary plus dearness allowance if you rent in Delhi, Mumbai, Kolkata or Chennai, or 40% anywhere else. Three. The rent you pay less 10% of basic plus dearness allowance.
Whichever is smallest is exempt, and the balance of your HRA is added to taxable salary. The page names the binding limb because that is what tells you which lever moves the answer: if the rent limb binds, more rent raises the exemption; if either of the others binds, it does nothing at all.
“Salary” here means basic plus dearness allowance, not your total package. That single definition is behind most of the confusion about this calculation.
None of this is available under the new tax regime. The HRA exemption exists only if you are taxed under the old regime. Since the new regime is now the default, the first question is which one you are in, and the regime comparison settles that before this page is relevant at all.
It assumes the same salary, HRA and rent for the whole year. If any of them changed, the exemption is computed for each period separately and added, which usually produces a slightly different total.
It does not check whether you can substantiate the claim. Rent receipts are needed, and the landlord’s PAN is required where annual rent exceeds ₹1,00,000.
Only four cities count as metro for this purpose, regardless of what rents are actually like elsewhere.
As the least of three amounts: the HRA received, 50% of basic for a metro or 40% elsewhere, and rent paid less 10% of basic.
On the defaults here, with ₹6,00,000 of basic, ₹3,00,000 of HRA and ₹2,40,000 of rent in a metro: the limbs are ₹3,00,000, ₹3,00,000 and ₹1,80,000. The third is smallest, so ₹1,80,000 is exempt and the remaining ₹1,20,000 of HRA is taxable. At a 30% slab the exemption is worth ₹54,000.
Only Delhi, Mumbai, Kolkata and Chennai. That list has not been updated in decades, so Bengaluru, Hyderabad, Pune and Gurugram all use the 40% limb despite rents that are frequently higher than in Kolkata. It is a common and expensive assumption to get wrong, because the difference is ten percentage points of basic salary.
Only if the rent limb is the one that binds. If your exemption is already capped by the HRA you receive or by 50% of basic, paying more rent changes nothing at all: the extra is simply money spent. This is why the page names the binding limb rather than just printing a figure. Where the rent limb does bind, each extra rupee of rent adds a rupee of exemption, up to the point another limb takes over.
Yes, and it is legitimate more often than people assume. If you own a house in one city and genuinely rent in another because of your job, both claims stand. It also works where you own a property that is let out and rent the place you live in. What does not work is claiming HRA on a property you own and occupy. The claim needs to reflect the actual arrangement, and where it does, it survives scrutiny.
Yes, provided the arrangement is real. The property must be owned by them and not by you, the rent must actually be paid, preferably by bank transfer, and they must declare it as income in their own return. Done properly this can be efficient where the parent is in a lower slab or below the taxable threshold. Done as a paper exercise with no money moving, it is the kind of claim that gets disallowed.
Rent receipts, and the landlord’s PAN where annual rent exceeds ₹1,00,000, which is ₹8,334 a month. A rental agreement helps. Payment by bank transfer rather than cash is considerably easier to substantiate. If your employer did not process the exemption in your Form 16, you can still claim it in your return, though you should expect to be able to produce the evidence.
Then this exemption does not apply, because it operates on the HRA component. A separate deduction exists for rent paid by someone who receives no HRA, subject to its own limits and conditions, and it is far more restrictive. It is a different calculation from this one and worth checking against your own facts.
Where you genuinely pay rent and are taxed under the old regime, a salary structure with a larger HRA component can be worth real money, since the exemption is capped by both the HRA received and by a share of basic. That said, if you are on the new regime the entire question is moot, and for most salaried people now the new regime is the starting point. Settle the regime first.
No. The house rent allowance exemption is available under the old regime only. Under the new regime the whole HRA is taxable, whatever rent you pay.
No. Only Delhi, Mumbai, Kolkata and Chennai qualify for the 50% limb. Bengaluru, Hyderabad, Pune and everywhere else use 40% of basic salary plus dearness allowance.
Where annual rent exceeds ₹1,00,000, which is about ₹8,334 a month, yes. Below that, rent receipts are generally sufficient, though a rental agreement and payment by bank transfer make any claim easier to support.
Yes, if they own the property, you actually pay rent to them, and they declare that rent as income in their return. The arrangement has to be genuine, with money moving, rather than a paper claim.
There is no absolute cap. The exemption is limited by the three limbs, so in practice it can never exceed the HRA you receive, nor 50% of basic in a metro or 40% elsewhere.
No. It is arithmetic on the rules as they stand for FY 2026-27 under the Income-tax Act, 2025. Zenith is an AMFI-registered mutual fund distributor and not a tax practitioner. A claim involving rent paid to family is worth confirming with one.
Talk to the desk
HRA is worth nothing under the new regime, so the useful question is which regime leaves you better off once every deduction you can actually claim is counted. Bring your numbers and we will work through both.
Tax rules shown are those in force for FY 2026-27 under the Income-tax Act, 2025, as checked on 20 August 2026. This is arithmetic on stated rules, not tax advice.
