HRA exemption calculator for FY 2026-27

Your exemption is the least of three amounts, not simply the rent you paid or the HRA on your payslip. This works out all three and tells you which one is holding your exemption down.

Worked example: what the 2026 change is worth

On a salary of ₹10,00,000, HRA of ₹6,00,000 and rent of ₹7,00,000:

Same salary, same rent, same employer. ₹1,00,000 of difference, decided entirely by which side of the city list you fall on.

The three limbs, explained

Limb one — the HRA you actually received. You cannot exempt more allowance than you were paid. This binds when your rent is high relative to a modest HRA component.

Limb two — 50% of salary in a metro, 40% elsewhere. A statutory ceiling regardless of what you pay or receive. This is the limb the 2026 city change moves.

Limb three — rent paid, less 10% of salary. The law assumes you would have spent 10% of salary on housing anyway, so only rent above that counts. This is why a high salary with modest rent can produce a surprisingly small exemption — and why it frequently binds.

Things that catch people out

HRA exemption does not exist in the new regime. It is available only if you file under the old regime. That single fact often decides which regime is better for a metro tenant, and it is why our income tax calculator computes both.

Above ₹1,00,000 of annual rent you need your landlord's PAN. Without it the exemption can be disallowed, and it is not something you can fix comfortably after the fact.

Paying rent to a parent is allowed, but it must be real. They must actually own the property and must declare the rent as their income. A rent agreement and bank transfers make the position defensible; cash and a verbal arrangement do not.

No HRA in your salary? You may still get relief. Section 80GG covers rent paid by someone whose pay contains no HRA component. It is a smaller deduction with its own conditions, and it is also old regime only.