🧾 Tax & Investment

HRA Exemption Calculation 2026 — How to Save Tax on House Rent

HRA exemption calculation 2026. Section 10(13A) formula. Metro vs non-metro cities. How to calculate HRA exemption on salary. Documents for HRA claim. HRA without receipts up to Rs 1 lakh.

By FinMandi TeamMay 8, 202610 min read✓ May 2026 Updated

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Reviewed by FinMandi Research Team

Backed by 10+ years of banking experience · Verified May 2026

✓ RBI Sources ✓ Bank Verified ✓ May 2026

Quick Summary

HRA exemption = minimum of 3 values: actual HRA received, 50/40% of basic salary, actual rent minus 10% of basic
Metro cities (Delhi, Mumbai, Kolkata, Chennai): 50% of basic salary
Non-metro cities: 40% of basic salary
Rent receipts not required if annual rent is below Rs 1 lakh
Landlord's PAN mandatory if annual rent exceeds Rs 1 lakh
HRA and home loan interest deduction (24b) can both be claimed simultaneously
Self-employed professionals cannot claim HRA — they claim 80GG instead

HRA Exemption Formula — Section 10(13A)

HRA exemption is the minimum of these three values:

#	Component	Formula
1	Actual HRA received from employer	As per salary slip
2	Rent paid minus 10% of basic salary	Annual rent – 10% of annual basic
3	% of basic salary (metro/non-metro)	50% of basic (metro) / 40% of basic (non-metro)

HRA Calculation Example

Salary details: Basic salary Rs 50,000/month · HRA received Rs 20,000/month · Rent paid Rs 18,000/month · City: Delhi (Metro)

Component 1: Actual HRA = Rs 20,000/month = Rs 2,40,000/year
Component 2: Rent – 10% of basic = (18,000 × 12) – (50,000 × 12 × 10%) = 2,16,000 – 60,000 = Rs 1,56,000
Component 3: 50% of basic = 50% of (50,000 × 12) = Rs 3,00,000
HRA Exemption = Minimum of Rs 2,40,000, Rs 1,56,000, Rs 3,00,000 = Rs 1,56,000
Tax saved at 30% slab = Rs 1,56,000 × 30% = Rs 46,800!

Metro vs Non-Metro Cities

Category	Cities	HRA % of Basic
Metro	Delhi, Mumbai, Kolkata, Chennai	50%
Non-Metro	Bangalore, Hyderabad, Pune, all others	40%

Note: Bangalore, Hyderabad and Pune are NOT classified as metro cities for HRA purposes even though they are major cities. They fall in the 40% category. Only Delhi, Mumbai, Kolkata and Chennai get the 50% benefit.

Documents Required for HRA Claim

Rent receipts (monthly) — not required if annual rent below Rs 1 lakh
Landlord's PAN — mandatory if annual rent exceeds Rs 1 lakh
Rent agreement (recommended)
Bank transfer records (recommended instead of cash payments)

Also read: Income Tax Saving Tips · New vs Old Tax Regime · Tax Calculator

Frequently Asked Questions

Yes! You can claim both HRA exemption (Section 10(13A)) and home loan interest deduction (Section 24b — up to Rs 2 lakh) simultaneously. This is possible when you are paying rent in a city where you work but also have a home loan on a property in another city or even in the same city. HRA and home loan deductions are independent of each other.

If your landlord refuses to give PAN for annual rent above Rs 1 lakh, your HRA claim may be disallowed by your employer. However you can still claim HRA when filing your own ITR — attach a declaration by landlord that they don't have PAN or that annual rent is below the taxable limit. Alternatively, request your landlord to quote 'NOAPPLICABLE' in Form 12BB.

No. HRA exemption is only available to salaried individuals who receive HRA as part of their salary package. Self-employed professionals, freelancers and business owners cannot claim HRA. They can instead claim deduction under Section 80GG — up to Rs 5,000 per month or 25% of total income, whichever is lower, for rent paid without receiving HRA.

📋 Sources & Methodology

Data sourced from: RBI official website · Official bank websites · SEBI · IRDAI · Ministry of Finance press releases. Rates and data verified by FinMandi Research Team. Last verified: May 2026. FinMandi does not accept payment to rank any bank or product.

Disclaimer: All information is as of May 2026. For educational purposes only. Verify with relevant institutions before making decisions.