Enter basic salary, HRA received, and rent paid — the exemption is the minimum of the three statutory tests, computed live.
The exempt portion is the minimum of three amounts: (1) actual HRA received, (2) rent paid minus 10% of basic salary + DA, and (3) 50% of basic + DA in a metro city (Delhi, Mumbai, Kolkata, Chennai) or 40% elsewhere. Whatever HRA remains above the exemption is taxable as salary. The "minimum of three" structure means the actual constraint is often not the amount you're paid, but whichever of the three rules is tightest for your specific numbers — which is exactly why the calculator shows which rule is binding.
No — HRA exemption is available only under the old regime. If you claim significant HRA, that's often a major factor in whether the old regime beats the new one for you; compare both in the Tax calculator, entering your HRA exemption from this page as one of the old-regime deductions.
The Income Tax Act designates Delhi, Mumbai, Kolkata, and Chennai as "metro" cities for this specific 50% rule, reflecting historically higher rents in these four cities compared to the rest of the country. Every other city, including large ones like Bangalore, Hyderabad, and Pune, falls under the 40% non-metro rule despite often having comparably high rents today — a rule that hasn't been updated to reflect two decades of urban growth outside the original four metros.
Employers typically require rent receipts to process HRA exemption in payroll, and the landlord's PAN is mandatory when annual rent exceeds ₹1,00,000 for the year. Paying rent to a parent is legal if actually paid and declared in their income (and taxed as their rental income) — a legitimate and fairly common arrangement, but one that requires the payment and declaration to be genuine, not just paperwork.
Yes, in genuine cases — for example, owning a home in one city (claiming home loan interest under Section 24) while renting in another city for work (claiming HRA). Both on the same property in the same city generally doesn't hold up under scrutiny, since the underlying premise (you need to rent because your own home isn't where you work) doesn't apply.
A broad tax exemption specifically for salaried employees' rent is unusual internationally — most countries either don't tax housing allowances specially or handle housing costs through different mechanisms entirely. The US has a narrower, occupation-specific parallel: a "parsonage allowance" for clergy and a housing allowance for military members (BAH) can be excluded from taxable income, but there's no general HRA-style benefit for ordinary salaried employees. The UK offers no direct rent tax exemption for employees, though a self-employed person working from home can deduct a portion of home costs as a business expense, a different mechanism aimed at the self-employed rather than renters generally. Several European countries offer rent subsidies or housing benefits administered as direct government payments to lower-income renters, rather than as an income tax exemption tied to salary structure. India's HRA is distinctive in being baked directly into standard salary structuring for a very wide swath of the salaried workforce, which is why it's such a common line item on Indian payslips specifically.
If you're a renter under the old regime with rent that would make the exemption meaningful, a higher HRA component (traded off against other salary heads) can genuinely reduce your tax — but the benefit only exists if you're actually paying enough rent to hit the exemption ceiling, and it disappears entirely if you move to the new regime or don't rent. This is a conversation worth having with HR specifically if your rent is substantial relative to your salary; if you own your home or pay minimal rent, a large HRA component mostly just becomes fully taxable income with no benefit.
Worked example: Basic+DA ₹6,00,000, HRA received ₹2,40,000, rent ₹3,00,000, metro: the three tests give ₹2,40,000 / ₹2,40,000 (3,00,000 − 60,000) / ₹3,00,000 — minimum is ₹2,40,000, so the entire HRA is exempt and taxable HRA is zero.
From 1 April 2026 four more cities count as metros for HRA — read why the 50% upgrade changes nothing for many renters, and see how HRA fits into your CTC. HRA exemption only applies under the old regime — see what changed under the new Income Tax Act 2025 before deciding which regime to file under. Leaving your job soon? See the Gratuity Calculator. India-specific money rules are worked through end to end in our book, Paisa Playbook. HRA is usually the deduction that decides your regime — the Old vs New Regime Calculator settles it on your own numbers.