Name: HRA Exemption Calculator — Online Tool
Availability: InStock
Author: Bulan Sarkar

Part of the system: HRA exemption in 5 steps, Old vs new regime in 3 steps. Steps, checks and a free printable page.

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Rules last checked on 30 September 2026 against the Income-tax Rules, 2026 (rules 279 and 205, notified by CBDT as G.S.R. 198(E) on 20 March 2026) and the Income-tax Act, 2025 as amended by the Finance Act, 2026 (Schedule III, Table Sl. No. 11, and section 202), both published on incometaxindia.gov.in. The results were also cross-checked against the Income Tax Department's own HRA calculator.

Short answer

Tax-free HRA is the lowest of three amounts: the HRA you actually received, rent paid minus 10% of basic plus DA, and 50% of basic plus DA (40% outside the listed cities). From tax year 2026-27 the 50% rate covers eight cities: Delhi, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Pune and Ahmedabad. The exemption counts only if you file under the old tax regime.

The three-way minimum, step by step

Rule 279 of the Income-tax Rules, 2026 exempts the least of three figures, each worked out for the period you actually rented:

HRA received from your employer.
Rent paid minus 10% of salary. If your rent is below a tenth of your salary, this is zero and nothing is exempt.
50% of salary if you live in one of the eight listed cities, 40% anywhere else.

Here "salary" means basic pay plus dearness allowance where your terms of employment provide for DA. Other allowances and perquisites are left out. Whatever HRA sits above the lowest figure is added to your taxable salary.

The calculator shows all three figures with your inputs and marks the lowest. When rent is what holds you back, it also shows the rent at which the exemption would reach its ceiling. You can type monthly or yearly amounts; the switch converts what you have already entered.

Which cities get 50%

From tax year 2026-27, the table in rule 279 lists Mumbai, Kolkata, Delhi, Chennai, Hyderabad, Pune, Ahmedabad and Bengaluru at 50%, and every other place at 40%. The test is where your rented home is, not where your employer's office is.

Up to 2025-26, under section 10(13A) of the Income-tax Act, 1961 and rule 2A, only Delhi, Mumbai, Kolkata and Chennai got 50%. If you are still sorting out a 2025-26 return, set the tax year to 2025-26 and Bengaluru, Hyderabad, Pune and Ahmedabad drop back to 40%. The rule names cities rather than wider metro regions, so if you live in a place like Gurugram, Noida or Thane, check with your employer how they treat it.

HRA exemption works only under the old regime

The new tax regime is the default under section 202 of the Income-tax Act, 2025 (the successor to section 115BAC). Section 202(2) switches off a list of exemptions, and Schedule III Sl. No. 11, the HRA exemption, is on it. Under the new regime your whole HRA is taxable.

A salaried person can still choose the old regime each year when filing. Whether that pays depends on your total deductions, so run both with the income tax calculator before deciding. A large HRA exemption on its own does not guarantee that the old regime comes out cheaper.

Landlord PAN and the paperwork

Your employer applies the exemption through payroll only if you give them the details. From 2026-27 that is Form 124, which replaced Form 12BB. Under rule 205, when the rent for the tax year is more than ₹1,00,000, you must give the landlord's name, address and PAN, plus your relationship with the landlord if there is one. That works out to about ₹8,333 a month.

Two conditions in Schedule III matter too. You must not own the home you live in, and you must actually pay the rent. Rent paid to a parent can qualify when it is genuine and the parent reports it as income. The relationship now has to be disclosed on Form 124.

Worked examples

Pune, where the 2026 change helps

Basic ₹50,000 a month (₹6,00,000 a year), no DA, HRA ₹25,000 a month (₹3,00,000), rent ₹32,000 a month (₹3,84,000).

(1) HRA received: ₹3,00,000. (2) Rent minus 10% of salary: ₹3,84,000 − ₹60,000 = ₹3,24,000. (3) 50% of salary, since Pune is now listed: ₹3,00,000. The lowest is ₹3,00,000, so the entire HRA is tax-free.

Under the 2025-26 rules Pune got 40%, so limit (3) would have been ₹2,40,000. That exemption would have left ₹60,000 taxable. The rent is over ₹1,00,000 a year, so the landlord's PAN goes on Form 124.

A smaller city, where rent is the limit

Basic ₹30,000 a month (₹3,60,000 a year), HRA ₹12,000 a month (₹1,44,000), rent ₹8,000 a month (₹96,000), outside the eight cities.

(1) HRA received: ₹1,44,000. (2) Rent minus 10% of salary: ₹96,000 − ₹36,000 = ₹60,000. (3) 40% of salary: ₹1,44,000. The lowest is ₹60,000, which is the exempt amount, and ₹84,000 of HRA is taxed.

Rent is the binding figure here. At ₹15,000 a month (₹1,80,000 a year), limit (2) would reach ₹1,44,000 and the whole HRA would be exempt. The ₹96,000 yearly rent is under ₹1,00,000, so no landlord PAN is needed.

Written by Bulan Sarkar, who checked the results by hand and against a second public calculator. Use it for planning; it isn't tax or investment advice.

Sources

Income Tax Calculator

Tax for 2026-27 under both regimes, slab by slab, with the ₹12 lakh rebate and its marginal relief, employer NPS, surcharge, cess, monthly TDS and your marginal rate.