What is the formula for HRA tax exemption in India?

HRA tax exemption is the lowest of three conditions: 1) Actual HRA received from your employer, 2) Rent paid minus 10% of basic salary, or 3) 50% of basic salary for metro cities (Delhi, Mumbai, Kolkata, Chennai) or 40% for non-metro cities.

Can I claim HRA exemption under the New Tax Regime?

No. HRA exemption is not available under the New Tax Regime (Section 202 of Income-tax Act, 2025). It can only be claimed if you opt for the Old Tax Regime.

When is a landlord PAN mandatory for claiming HRA?

If your annual rent payment exceeds ₹1,00,000 (approx ₹8,333 per month), it is mandatory under Income Tax rules to submit your landlord's PAN to your employer for TDS exemption.

Old Regime Tax Tool

HRA Exemption Calculator

House Rent Allowance calculation based on official 3-rule formula. Note: HRA exemption applies exclusively under the Old Tax Regime.

Annual Basic Salary (+ DA if applicable)

₹

Annual HRA Received from Employer

₹

Total Annual Rent Paid

₹

City of Residence

Metro (50% basic) Non-Metro (40% basic)

Metro cities defined by IT Department: Delhi, Mumbai, Kolkata, Chennai.

Tax-Exempt HRA Amount 100% Tax Free

₹1,56,000

₹13,000 tax-free per month

Taxable HRA ₹84,000

Estimated Tax Saved ₹48,672

Monthly Rent Paid ₹18,000

Landlord PAN Required (> ₹1L)

Official 3-Condition Breakdown

The Income Tax Department allows exemption on the lowest of the following 3 amounts:

Actual HRA Received Received from your employer

₹2,40,000

Rent Paid minus 10% of Basic ₹2,16,000 - ₹60,000 (10% of 6L)

₹1,56,000

50% of Basic Salary (Metro) 50% of annual basic salary

₹3,00,000

Condition 2 applies (lowest amount): Exempt HRA = ₹1,56,000

Complete Guide to House Rent Allowance (HRA) Exemption

House Rent Allowance (HRA) is one of the most substantial salary exemptions available to salaried individuals living in rented accommodations in India.

Important Rules and Documents Required

Rent Receipts: Always collect stamped or signed rent receipts from your landlord for every month.
Registered Rent Agreement: Employers and tax assessment officers require a copy of your valid lease agreement.
Landlord PAN Mandatory above ₹1 Lakh/year: If your total rent paid in a financial year exceeds ₹1,00,000, you must submit your landlord's PAN. If your landlord does not have a PAN, a signed declaration (Form 60) is required.
Paying Rent to Parents: You can legally pay rent to your parents and claim HRA, provided your parents own the property, you transfer the rent via bank transfer, and your parents report this rental income in their income tax return.