# How to Claim HRA Exemption in FY 2026-27: Rules and Proofs > How HRA exemption is calculated, the proofs your employer needs, paying rent to parents, missed declarations, and when HRA is worth claiming at all. Source: https://trykosh.com/learn/how-to-claim-hra-exemption Guide - Income tax # How to claim HRA exemption, step by step House rent allowance is part of most salaries, but only part of it is tax-free, and only if you pay rent and choose the old regime. Here is how the exempt amount is worked out, what to give your employer, and the cases that trip people up. Updated 25 October 20266 min readBy the Kosh team On this page[First: does HRA matter for you?](#does-it-matter)[The formula: the lowest of three amounts](#formula)[Worked examples](#worked-examples)[When things change during the year](#mid-year-changes)[How to claim it through your employer](#claim-through-employer)[Claiming HRA in your return instead](#claim-in-itr)[Tricky cases](#tricky-cases)[FAQs](#faq) ## First: does HRA matter for you? HRA exemption is an **old-regime** benefit. In the new regime, every rupee of HRA is taxed like the rest of your salary. So before collecting rent receipts, check which regime you'll end up in. If your salary is INR 12.75 lakh or less, the new regime charges no tax at all, and HRA can't beat zero. Take Arjun: INR 12 lakh salary in Pune, INR 6 lakh basic, INR 2.4 lakh HRA, INR 18,000 a month rent, full 80C and INR 25,000 of health insurance. HRA cuts his old-regime tax from INR 1,11,800 to INR 79,352, a real saving of INR 32,448. But the new regime would charge him **INR 0**. For Arjun, HRA is irrelevant. It starts to matter at higher salaries with high rent, where it can be the deduction that tips the [old vs new regime](/learn/old-vs-new-tax-regime-fy-2026-27) decision. ## The formula: the lowest of three amounts The exempt part of your HRA is the **lowest** of: 1. The HRA you actually received for the months you paid rent. 2. Rent paid minus 10% of your basic salary (plus DA, if any) for the same months. 3. 50% of basic if you live in Delhi, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Pune or Ahmedabad; 40% anywhere else. Whatever HRA is left over is taxable. The middle limb is the one that usually binds: it means rent below 10% of basic gets you nothing, and each rupee of rent above it buys one rupee of exemption until one of the other limits stops it. **Eight cities now get 50%** The Income-tax Rules, 2026, in force from 1 April 2026, extended the 50% limit from the four old metros to eight cities by adding Bengaluru, Hyderabad, Pune and Ahmedabad. Everywhere else, including Gurugram, Noida and Jaipur, stays at 40%. If you live in one of the four new cities and pay high rent, your exemption may be larger from FY 2026-27 than it was last year. ## Worked examples HRA exemption for a full year, computed with the HRA calculator Neha, Jaipur Kabir, Mumbai Sana, Bengaluru Basic a month INR 50,000 INR 60,000 INR 60,000 HRA a month INR 20,000 INR 30,000 INR 30,000 Rent a month INR 18,000 INR 35,000 INR 40,000 1\. HRA received INR 2,40,000 INR 3,60,000 INR 3,60,000 2\. Rent minus 10% of basic INR 1,56,000 INR 3,48,000 INR 4,08,000 3\. 40% or 50% of basic INR 2,40,000 (40%) INR 3,60,000 (50%) INR 3,60,000 (50%) Exempt HRA (lowest) INR 1,56,000 INR 3,48,000 INR 3,60,000 Taxable HRA INR 84,000 INR 12,000 INR 0 Sana's rent is high enough that her whole HRA is tax-free. Under last year's 40% limit for Bengaluru, she'd have been capped at INR 2,88,000, so the 2026 rules add INR 72,000 to her exemption. Kabir's high Mumbai rent makes nearly all of his HRA tax-free. Neha, in Jaipur, is still on the 40% limit, but rent is what limits her. Two variations: if Sana shared a flat at INR 10,000 a month, her exemption would fall to INR 48,000; and if Neha had moved into her flat in August and paid rent for only 8 months, the calculation would use 8 months of everything and her exemption would be INR 1,04,000. [Free tool**HRA exemption calculator**Work out how much of your house rent allowance is tax-free, which of the three limits applies to you, and how much stays taxable.](/tools/hra-exemption-calculator)[Free tool**Rent receipt generator**Make monthly rent receipts for your HRA claim in a minute. Fill in the tenancy once, pick the months, and print one receipt per month, ready for your landlord to sign.](/tools/rent-receipt-generator)[Free tool**Old vs new regime calculator**Find out which regime leaves you more money this year, and exactly how many more rupees of deductions the old regime would need to catch up.](/tools/old-vs-new-tax-regime-calculator)[Free tool**TDS on rent calculator**Work out the TDS you must deduct when you pay rent above INR 50,000 a month, whether you're a tenant paying for a home or a business paying for an office or machinery.](/tools/tds-on-rent-calculator) ## When things change during the year The formula is applied to the months in question, so when rent, salary or city changes mid-year, work out each stretch separately and add them up. A single yearly calculation on averages can overstate or understate the exemption. - **Rent goes up in October.** Calculate April to September on the old rent and October to March on the new one. - **A raise changes your basic.** Each period uses that period's basic and HRA. A higher basic raises the 10% deduction in the second limb and the 40% or 50% cap in the third. - **You move from Mumbai to Jaipur.** The months in Mumbai use 50% of basic; the months in Jaipur use 40%. A move between two of the eight 50% cities, such as Mumbai to Pune, keeps the 50% limit throughout. - **You change jobs.** Each employer applies HRA only to its own months. Make sure the second employer doesn't count rent months already claimed with the first, and check the total in your return. - **You stop renting.** Once you move into your own home or your parents' home without paying rent, HRA for those months is fully taxable. The [HRA calculator](/tools/hra-exemption-calculator) takes the number of months you paid rent, so run it once for each stretch and add the results. ## How to claim it through your employer 1. **Declare in April.** Choose the old regime and declare your expected monthly rent in the employer's investment declaration. TDS is then lower all year. 2. **Collect proof as you go.** Rent receipts (monthly or quarterly) with the landlord's name, address of the property, the period, the amount and the landlord's signature. Paying by bank transfer or UPI and keeping the rental agreement makes the proof much stronger. Our [rent receipt generator](/tools/rent-receipt-generator) builds receipts in the usual format. 3. **Give the landlord's PAN if rent exceeds INR 1 lakh a year.** That's about INR 8,334 a month. If the landlord has no PAN, they need to give a signed declaration saying so. 4. **Submit proofs when HR asks**, usually in January or February. If you miss the window, the employer recomputes TDS without HRA for the last months and deducts more. 5. **Check Form 16.** The exempt HRA should appear in Part B. If it's missing or wrong, you can still claim the right figure in your return. ## Claiming HRA in your return instead If you forgot to declare, joined mid-year, or your employer didn't accept a proof, you can claim the exemption directly in your ITR, as long as you file by the due date and pick the old regime. Compute the exempt amount with the formula above, enter it under exempt allowances, and keep the receipts and agreement in case the department asks. The excess TDS comes back as a refund. See [how to file ITR as a salaried person](/learn/how-to-file-itr-salaried). ## Tricky cases - **Paying rent to your parents.** Allowed, if the house is theirs, you actually pay (by bank transfer, ideally every month), and they show the rent as income in their own return. It's a legitimate way to shift income to a parent in a lower slab, but paper it properly. - **Paying rent to your spouse.** Generally not accepted: living with your spouse in their house isn't treated as a tenancy. - **You own a home in the same city.** If you live in your own house you can't claim HRA. If you own one in another city (or rent it out) and rent where you work, you can claim HRA and, in the old regime, home-loan interest too. - **No HRA in your salary.** Self-employed people and employees whose pay has no HRA component may get a separate, smaller deduction for rent in the old regime (known as 80GG). It has its own conditions and limits, so check them before you file. - **Rent above INR 50,000 a month.** Individual tenants not liable to audit must deduct 2% TDS on the rent and deposit it. Use the [TDS on rent calculator](/tools/tds-on-rent-calculator). - **Fake receipts.** The department matches HRA claims with landlords' returns and PANs, and asks for bank proof. A claim without real rent behind it is under-reporting, with penalties far larger than the tax saved. ## Frequently asked questions How is HRA exemption calculated? The exempt amount is the lowest of three figures: the HRA you received, rent paid minus 10% of basic salary, and 50% of basic in Delhi, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Pune or Ahmedabad, or 40% elsewhere. The rest of your HRA is taxable. All three are worked out for the months you actually paid rent. Can I claim HRA in the new tax regime? No. HRA exemption is available only in the old regime. In the new regime the whole HRA is taxed as salary, so compare both regimes before collecting proofs. Can I claim HRA if I pay rent to my parents? Yes, if your parents own the house, you genuinely pay the rent, ideally by bank transfer, and they report it as income in their own return. Keep a rental agreement and receipts. Paying rent to a spouse is generally not accepted. Is landlord PAN mandatory for HRA? Your employer needs the landlord's PAN when the rent you pay is more than INR 1 lakh a year. If the landlord has no PAN, a signed declaration from them is needed instead. I forgot to submit rent receipts to my employer. Can I still claim HRA? Yes. Choose the old regime in your income tax return, filed by the due date, and claim the exempt HRA there. Any extra TDS deducted by your employer is refunded. Keep the receipts and agreement in case the department asks for them. ## Sources - [Income Tax Department](https://www.incometax.gov.in/) Written by the Kosh team and checked against the rules in force on 25 October 2026. This guide is general information, not tax, legal or investment advice. Kosh is an educational financial planning tool by Primedepth Labs. It is not a SEBI-registered investment adviser and does not offer personalised investment advice, hold your money or execute trades. Markets carry risk; read scheme documents carefully and consult a registered adviser before acting. ## Upload your statement and Kosh does this for you. Kosh reads your bank and card statements, works out your tax under both regimes and turns guides like this one into your own numbers and next steps. [Start free](/signup?via=learn-how-to-claim-hra-exemption)