HRA exemption, with the new 8-city rule.
Calculate your exemption under Section 10(13A), see which of the three statutory limbs is actually capping you, and compare FY 2025-26 against FY 2026-27 — where four more cities moved to the 50% rate.
Salary & Rent Details
Results
Enter your salary and rent details, then click Calculate Exemption.
How the exemption is worked out
Section 10(13A) read with Rule 279 gives three ceilings. You get the lowest of them — which is why a generous HRA component alone does not guarantee a large exemption.
The second limb is the one people forget. If your rent is low relative to salary, rent minus 10% of salary becomes the binding constraint and the city classification is irrelevant. The calculator marks whichever limb is actually capping you.
What the 2026 change actually does
For over two decades only Delhi, Mumbai, Kolkata and Chennai carried the 50% rate. Bengaluru, Hyderabad, Pune and Ahmedabad — where rents run well above most of the country — sat at 40%, the same as a tier-three town. Rule 279 corrects that from 1 April 2026.
The catch is timing. The change applies to salary earned on or after 1 April 2026, so it lands in FY 2026-27 and shows up in the return filed during 2027. The return being filed in July 2026 covers FY 2025-26 and is still governed by the four-city list.
Documentation you need
- Landlord's PAN where annual rent exceeds ₹1,00,000.
- Form 124 replaces Form 12BB as the employee declaration from FY 2026-27, and now requires you to disclose your relationship with the landlord.
- Rent receipts and a lease agreement, with rent ideally paid through banking channels rather than cash.
- Old regime election — none of this matters if you are in the new regime.
City classification at a glance
| City | FY 2025-26 | FY 2026-27 onwards | Change |
|---|---|---|---|
| Delhi | 50% | 50% | — |
| Mumbai | 50% | 50% | — |
| Kolkata | 50% | 50% | — |
| Chennai | 50% | 50% | — |
| Bengaluru | 40% | 50% | Upgraded |
| Hyderabad | 40% | 50% | Upgraded |
| Pune | 40% | 50% | Upgraded |
| Ahmedabad | 40% | 50% | Upgraded |
| Gurugram, Noida, Jaipur and all others | 40% | 40% | — |
Gurugram and Noida are not included, despite sitting inside the National Capital Region. The rule names cities, not urban agglomerations, so the 40% rate continues there.
Questions people ask
Which cities qualify for the 50% HRA exemption?
From FY 2026-27 eight cities qualify: Delhi, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Pune and Ahmedabad. Rule 279 of the Income-tax Rules 2026, notified on 20 March 2026, added the last four. For FY 2025-26 and earlier only the original four qualified, and Bengaluru, Hyderabad, Pune and Ahmedabad were capped at 40%.
Can I claim the 50% rate for Bengaluru in the return I file this July?
No. The return filed in July 2026 covers FY 2025-26, which is governed by the earlier four-city list, so Bengaluru, Hyderabad, Pune and Ahmedabad remain at 40% for that year. The higher rate applies to salary earned on or after 1 April 2026 and first appears in the return filed during 2027.
Is HRA exemption available under the new tax regime?
No. The Section 10(13A) exemption is available only under the old tax regime. Under the new regime, which is the default, the entire HRA received is taxable as salary regardless of how much rent you pay or which city you live in.
How is HRA exemption calculated?
The exemption is the least of three amounts: the actual HRA received, the rent paid less 10% of salary, and 50% of salary for the eight specified cities or 40% elsewhere. Salary here means basic pay plus dearness allowance forming part of retirement benefits, plus commission computed as a fixed percentage of turnover.
Do I need my landlord's PAN?
Yes, where annual rent exceeds Rs 1,00,000. From FY 2026-27 the employee declaration also moves from Form 12BB to Form 124, which additionally requires you to disclose your relationship with the landlord. Rent paid to a parent or spouse is not automatically disallowed, but it must be genuine, supported by an agreement, and ideally paid through banking channels.
Does the 50% rate always increase my exemption?
No. The exemption is the least of three amounts, so raising the city cap from 40% to 50% helps only where that limb was the binding one. If your exemption is already limited by the actual HRA received or by rent less 10% of salary, moving to the higher city rate changes nothing at all.
Can I claim HRA and a home loan deduction together?
Yes in the right circumstances, and only under the old regime. The common cases are where you own a house in one city but genuinely live in rented accommodation in another for work, or where the owned property is let out. Claiming rent in the same city where you occupy your own house invites scrutiny.
What if I changed city or salary mid-year?
Compute the exemption separately for each period during which salary, rent and city classification stayed constant, then add the results. An annual average gives the wrong answer. This calculator assumes one consistent set of figures, so run it once per period and total the exempt amounts.