HRA Exemption Guide 2026: Calculation, Rules, Rent Receipts & How to Claim
Save up to ₹1-2 lakh in taxes with HRA exemption. Learn the exact formula, required documents, and common mistakes to avoid.
Key Points
- HRA exemption is under Section 10(13A) — only in old tax regime
- Exemption = Minimum of: Actual HRA, Rent - 10% Basic, 50%/40% of Basic
- Rent receipts needed if rent > ₹3,000/month
- Landlord PAN mandatory if rent > ₹1,00,000/year
What is HRA Exemption?
House Rent Allowance (HRA) is a component of your salary given by your employer to cover rental expenses. Under Section 10(13A) of the Income Tax Act, a portion of HRA is exempt from tax — but only if you actually pay rent and only under the old tax regime.
HRA Exemption Formula
HRA Exemption = Minimum of:
1. Actual HRA received from employer
2. Rent paid − 10% of (Basic + DA)
3. 50% of (Basic + DA) — for metro cities
40% of (Basic + DA) — for non-metro cities
Metro cities: Delhi, Mumbai, Kolkata, Chennai. All others are non-metro.
HRA Calculation Examples
Example 1: ₹50K Basic, ₹25K Rent, Mumbai
| Component | Annual Amount |
|---|---|
| Basic Salary | ₹6,00,000 |
| HRA Received | ₹2,40,000 |
| Rent Paid | ₹3,00,000 |
| 1. Actual HRA | ₹2,40,000 |
| 2. Rent − 10% Basic | ₹2,40,000 |
| 3. 50% of Basic (Mumbai) | ₹3,00,000 |
| HRA Exemption (minimum) | ₹2,40,000 |
| Tax Saved (at 30% slab) | ₹74,880 |
Example 2: ₹30K Basic, ₹15K Rent, Bangalore
| Component | Annual Amount |
|---|---|
| Basic Salary | ₹3,60,000 |
| HRA Received | ₹1,44,000 |
| Rent Paid | ₹1,80,000 |
| 1. Actual HRA | ₹1,44,000 |
| 2. Rent − 10% Basic | ₹1,44,000 |
| 3. 40% of Basic (non-metro) | ₹1,44,000 |
| HRA Exemption | ₹1,44,000 |
| Tax Saved (at 20% slab) | ₹29,952 |
Documents Required for HRA Claim
- Rent receipts: Monthly receipts with landlord name, address, amount, and signature
- Rent agreement: Recommended as supporting proof (not always mandatory)
- Landlord PAN: Mandatory if annual rent exceeds ₹1,00,000
- Bank statements: As proof of rent payment (especially for large amounts)
Common Mistakes to Avoid
- Claiming HRA in new regime: HRA exemption is NOT available under the new tax regime
- No rent receipts: Without receipts, your employer will add HRA to taxable income
- Missing landlord PAN: If rent > ₹1L/year, the claim may be rejected without landlord PAN
- Paying rent to family: You can pay rent to parents, but they must declare it as income and you need a genuine agreement
- Both HRA and 80GG: You cannot claim both. 80GG is for self-employed or people without HRA component
HRA for Self-Employed (Section 80GG)
If you're a freelancer and don't receive HRA, you can claim rent deduction under Section 80GG:
- Maximum deduction: ₹5,000/month (₹60,000/year)
- Conditions: You, spouse, or minor child should not own a house in the city of employment
- Must file Form 10BA declaration
- Available only under old tax regime
Rent Receipt Requirements
A valid rent receipt must contain:
- Tenant name and landlord name
- Rental period (month and year)
- Amount paid with payment mode
- Property address
- Landlord PAN (if rent > ₹1L/year)
- Revenue stamp (for cash payments above ₹5,000)
- Landlord signature
Generate Rent Receipts for Free
Use our free tool to generate rent receipts for all 12 months. Print-ready, no signup needed.