House Rent Allowance is one of the biggest tax breaks available to salaried renters, but only part of it is actually tax-free. This calculator applies the least-of-three rule to your own numbers and shows you the exact exempt amount, plus how much of your HRA stays taxable.
TL;DR: Your exempt HRA is the smallest of three figures: the HRA you get, your rent minus 10 percent of salary, and 50 percent of salary in a metro city (40 percent elsewhere). From FY 2026-27 the 50 percent list grows from four cities to eight, adding Bengaluru, Hyderabad, Pune, and Ahmedabad, so pick your financial year. Enter your numbers below to see yours. The exemption applies only under the old tax regime.
Enter your monthly figures. The calculator applies the least-of-three rule and updates live.
The highlighted card is the smallest of the three, and that is your exemption. HRA exemption applies only under the old tax regime; under the new regime the full HRA is taxable. General information, not tax advice.
The least-of-three rule, in plain terms
Your tax-free HRA is never simply the HRA on your payslip. The law caps it at the smallest of three figures, and the calculator above works all three out for you:
- The actual HRA you receive. You cannot exempt more than your employer actually pays you as HRA.
- Rent paid minus 10 percent of salary. The exemption is meant to cover rent that eats into your pay, so the first 10 percent of your salary is treated as your own share.
- 50 percent of salary in a metro, 40 percent elsewhere. A flat ceiling based on where you live.
Whichever of these is lowest is your exempt amount. Anything left over is added back to your taxable salary.
Metro or not: the list changed for FY 2026-27
The 50 percent figure is tied to your city, and the list of qualifying cities just grew. For FY 2025-26, the return most people file by 31 July 2026, only the four long-standing metros count: Delhi, Mumbai, Kolkata, and Chennai. Everywhere else, including Bengaluru, Hyderabad, Pune, and Ahmedabad, uses 40 percent.
From FY 2026-27, the year that began on 1 April 2026, the Income-tax Rules add four more cities to the 50 percent list: Bengaluru, Hyderabad, Pune, and Ahmedabad. So eight cities now qualify for 50 percent. Pick the right financial year in the tool above, because the same city can use 40 percent for last year’s return and 50 percent for this year’s, and that single difference can move your exemption by thousands a month.
Old regime only
The HRA exemption is a feature of the old tax regime. If you opt for the new regime, with its lower slab rates, your entire HRA becomes taxable. For renters with high rent and a large HRA component, the exemption can be worth more than the new regime’s lower rates, so run both before you pick. Compare your total tax under each, not just the HRA line.
Back it up with receipts
An exemption on paper is only as good as your proof. Your employer needs rent receipts for the months you claim, and the landlord’s PAN if your annual rent is over 1,00,000. Generate a clean set with the rent receipt generator, keep proof of the actual payments, and hold on to both in case of a query.
This tool is general information, not tax advice; the rules can change, so confirm against the Income Tax Department or a qualified advisor before you file. Last reviewed July 2026.
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References
- Income Tax Department, House Rent Allowance calculator and rules: https://incometaxindia.gov.in/Pages/tools/house-rent-allowance-calculator.aspx
- Income Tax Department, official filing portal: https://www.incometax.gov.in/iec/foportal/
