For the Financial Year 2025–26 (Assessment Year 2026–27), the rules for claiming House Rent Allowance (HRA) exemptions in India remain consistent with previous years. However, your ability to claim HRA benefits depends on whether you opt for the Old Tax Regime or the New Tax Regime
🏠 HRA Exemption Under the Old Tax Regime
Under the Old Tax Regime, HRA is exempt under Section 10(13A) of the Income Tax Act. The exempt amount is the least of the following three:
- Actual HRA received from your employer.
- 50% of salary (basic + dearness allowance) if residing in a metro city (Delhi, Mumbai, Kolkata, Chennai); 40% if in a non-metro.
- Rent paid minus 10% of salary (basic + dearness allowance).
Eligibility Criteria:
- You must be a salaried employee receiving HRA.
- You should be living in rented accommodation and paying rent.
- If annual rent exceeds ₹1 lakh, you must provide the landlord’s PAN.
- Maintain rent receipts and a rental agreement as proof.
For example, if you receive an HRA of ₹1,68,000 annually, your basic salary is ₹3,60,000, and you pay ₹1,92,000 in annual rent in a metro city, the exempted HRA would be ₹1,56,000, and the taxable HRA would be ₹12,000.
🚫 HRA Exemption Under the New Tax Regime
Under the New Tax Regime (Section 115BAC), HRA exemption is not available. This regime offers lower tax rates but eliminates most exemptions and deductions, including:(
- Section 10(13A) – HRA
- Section 80C – Investments in PPF, ELSS, etc.
- Section 80D – Medical insurance premiums
Therefore, if you opt for the New Tax Regime, the entire HRA amount received becomes taxable.
📊 Choosing Between Old and New Tax Regimes
Your decision should be based on your income structure and eligible deductions:
- Opt for the Old Tax Regime if:
- You pay substantial rent and can claim significant HRA exemption.
- You have other deductions under sections like 80C, 80D, etc.
- Opt for the New Tax Regime if:
- You have minimal deductions to claim.
- You prefer a simplified tax structure with lower rates.
Note: Salaried individuals can choose between the two regimes each financial year. (
🧮 HRA Calculation Tools
To accurately compute your HRA exemption, you can use the official HRA calculator provided by the Income Tax Department
This tool helps determine the exempted and taxable portions of your HRA based on your salary, HRA received, rent paid, and city of residence.(Income Tax India)
If you need assistance in calculating your HRA exemption or comparing tax liabilities under both regimes, feel free to provide your salary details, HRA received, rent paid, and city of residence. I can help you with a detailed comparison.