How HRA exemption is calculated
Under section 11 of the Income-tax Act, 2025 (section 10(13A) of the old Act), the HRA exemption is the lowest of three amounts:
- The actual HRA you receive from your employer
- Rent paid, minus 10% of (basic salary + dearness allowance)
- 50% of (basic + DA) if you live in one of the eight 50% cities, or 40% if you don't
Whichever of these three is smallest is what you get to exclude from your taxable income. The rest of your HRA — if any — is added to your taxable salary as usual.
Which cities get the 50% HRA limit?
From tax year 2026-27 (starting 1 April 2026), the Income-tax Rules, 2026 give the higher 50% limit to eight cities: Delhi, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Pune and Ahmedabad. Every other city, including Gurugram, Noida and Navi Mumbai, uses 40%. If you're still finishing an FY 2025-26 claim, only Delhi, Mumbai, Kolkata and Chennai qualify for 50% for that year.
Do I need rent receipts to claim this?
Yes. This calculator tells you how much is exempt — but your employer (or the Assessing Officer, if you're claiming it directly in your return) still needs rent receipts as proof for each month you're claiming. Once you know your numbers here, Easipaper's rent receipt generator can produce those receipts in seconds.