HRA Calculator Tax Year 2026–27

How the HRA exemption is worked out

The exemption is the smallest of three figures, which is why it so often comes in lower than people expect:

1. the HRA you actually received;
2. the rent you paid, less 10% of Basic + DA;
3. 50% of Basic + DA if you rent in Delhi, Mumbai, Kolkata or Chennai, 40% everywhere else.

Whichever is lowest is your exemption. The rest of your HRA is taxable like any other allowance.

Two consequences follow. If you pay no rent, you get nothing, regardless of how much HRA your salary structure gives you. And if your Basic is small, the third limit caps you well below your actual rent.

Bengaluru, Hyderabad and Pune are not metros for this

Only four cities count: Delhi, Mumbai, Kolkata and Chennai. Bengaluru, Hyderabad, Pune, Gurugram and Noida are all treated as non-metro, which limits you to 40% of Basic + DA, a real difference for anyone paying metro-level rent in a non-metro city.

The regime question

HRA exemption does not exist under the new regime. If you pay substantial rent, that alone can make the old regime worth keeping, but only alongside your other deductions, and only if the total beats the new regime’s wider slabs and larger standard deduction.

That is a whole-salary question rather than an HRA question. Run both regimes in the salary calculator to see which actually leaves you with more.