HRA calculator for FY 2026-27: how much of your HRA is tax-free

HRA exemption calculator

Enter your monthly basic salary, HRA and rent. The calculator shows all three limits, which one is lowest, and how much HRA stays taxable. Choose FY 2025-26 if you are still filing last year's return, because the city list was shorter then.

How is HRA exemption calculated?

Rule 279 of the Income-tax Rules, 2026 sets the limits. The exempt amount is the least of these, each worked out for the "relevant period", which is the part of the tax year you lived in the rented home:

1. 1

   The HRA you actually received

   The house rent allowance your employer paid you for those months.

2. 2

   Rent paid minus one-tenth of salary

   The rent you paid for those months, minus 10% of your salary for the same months. If your rent is less than 10% of salary, this is zero and nothing is exempt.

3. 3

   50% or 40% of salary

   50% of salary if the rented home is in Mumbai, Kolkata, Delhi, Chennai, Hyderabad, Pune, Ahmedabad or Bengaluru. 40% anywhere else.

"Salary" here is not your gross pay. Rule 279 defines it as salary including dearness allowance where your terms of employment provide for it, and excluding all other allowances and perquisites. For most private-sector employees that means basic pay. Employers and ClearTax also include commission paid as a fixed percentage of turnover.

Here ₹2,04,000 of the ₹2,40,000 HRA is tax-free and ₹36,000 is added to taxable salary. Paying more rent raises the second limit, until one of the other two becomes the lowest.

Which cities get 50% HRA in FY 2026-27?

From the tax year that began on 1 April 2026, eight cities get the 50% limit. Before that, under rule 2A of the old rules, only four did (ClearTax, Patron Accounting).

What changes for a Bengaluru, Hyderabad, Pune or Ahmedabad renter: take basic ₹40,000 a month, HRA ₹20,000 and rent ₹25,000. The three limits for a year are ₹2,40,000 (HRA), ₹2,52,000 (rent minus 10%) and 40% or 50% of ₹4,80,000. In FY 2025-26 the 40% limit of ₹1,92,000 was the lowest. In FY 2026-27 the 50% limit is ₹2,40,000, so the whole HRA of ₹2,40,000 is tax-free: ₹48,000 more than before.

The rule names cities, not their wider regions. Tax sites treat places such as Gurugram and Noida as "any other place" at 40% (Patron Accounting). If you live just outside a listed city, ask your employer how they read your address.

Which section of the Income-tax Act covers HRA now?

The Income-tax Act, 2025 replaced the Income-tax Act, 1961 from 1 April 2026. HRA was exempt under section 10(13A) of the old Act. Under the new Act the allowance is listed in Schedule III (Table, Sl. No. 11), and rule 279 sets the limits for it. ClearTax describes this as "section 11 read with Schedule III".

What do you need to claim HRA?

• The old tax regime. Tell your employer at the start of the year, and choose it again when you file your return.
• Rent receipts. One per month, signed by the landlord, with the rent, the period and the property address. Make them with the free rent receipt generator.
• The landlord's PAN if the rent you pay in the year is above ₹1,00,000. Without a PAN, a written declaration from the landlord (CBDT Circular 8/2013, explained by ClearTax).
• Form 124. From FY 2026-27 you declare rent and landlord details to your employer on Form 124, which replaces Form 12BB (official FAQ).
• A rent agreement helps if your employer or a tax officer asks questions later. See our rent agreement format.

If you forgot to give proof to your employer, you can still claim the exemption when you file your return under the old regime, as long as you keep the receipts and payment records.

Frequently asked questions