HRA Exemption: Complete Guide to Section 10(13A) for FY 2025-26
House Rent Allowance (HRA) is one of the most valuable tax-saving components available to salaried employees in India. Under Section 10(13A) of the Income Tax Act read with Rule 2A, a portion of the HRA received as part of your salary is exempt from income tax — provided you actually pay rent for accommodation.
How HRA Exemption is Calculated
The HRA exemption is the minimum of three amounts:
Condition 1: Actual HRA Received
The first cap is the total HRA component received from your employer during the financial year. The exemption cannot exceed what you actually receive.
Condition 2: Rent Paid Minus 10% of Basic Salary
This condition ensures only "excess" rent — the portion beyond 10% of your basic salary — qualifies for exemption. If you pay no rent, this value is zero and no exemption is available.
Condition 3: 50% or 40% of Basic Salary
For employees in the four metro cities — Delhi, Mumbai, Kolkata, or Chennai — the cap is 50% of basic salary. For all other cities, it is 40% of basic salary. Note that Bengaluru, Hyderabad, Pune, and Ahmedabad are classified as non-metro for HRA purposes despite their size.
Important Rules
- Actual rent must be paid: You cannot claim HRA exemption without paying rent.
- PAN requirement:For annual rent exceeding Rs 1,00,000, you must provide the landlord's PAN to your employer.
- Not available under new regime: HRA exemption is only available if you opt for the old tax regime.
For the most accurate tax planning, combine this HRA calculation with our Old Regime Tax Calculator to see the total impact on your tax liability.
Disclaimer
This calculator provides an estimate based on Section 10(13A) read with Rule 2A of the Income Tax Rules. Actual exemption may vary based on your employment terms, DA structure, and city classification. Consult a Chartered Accountant for personalized advice.